High Five: SBI, ITC, Infosys, Reliance, Tata Steel

SBI moves past resistance

Last week, the stock advanced 4.6 per cent, breaching its immediate resistance at ₹247. However, it faces the next crucial trend-deciding resistance level of ₹260. As the near-term uptrend from the early September low of ₹220 is strengthening, the chances that the stock may break the resistance level of ₹260 after minor testing remains high. Therefore, traders with a short-term perspective can use dips to buy the stock while maintaining a stop-loss at ₹247. An emphatic breakthrough of this resistance will pave way for an up move to ₹270 or ₹280 levels in the short term. The daily relative strength index has entered the bullish zone from the neutral region. The price rate of change indicator hovers in the positive territory, signifies buying interest. Nevertheless, a decisive fall below the immediate key base level of ₹247 can drag the stock down to ₹235. Next supports are at the levels of ₹230 and ₹220.

ITC extends its up move

The stock of ITC extended its short-term uptrend by advancing 1.6 per cent in the prior week. Though the stock hovers well above its 50 and 200-day moving averages, it faces significant resistance ahead and its daily indicators such as RSI and price rate of change are weakening. Hence, traders with a shot-term perspective should tread with caution in the coming week. The key resistance ahead is at ₹354, which is also a crucial trend-deciding level. Only a conclusive rally above this level will change the stock’s medium-term downtrend and take it higher to ₹370 and ₹380 levels in the short term. The stock may face difficulty in moving above the key resistance level of ₹354 at once. So it can witness some corrective sideways move or a decline and can find support in the band between ₹331 and ₹334. Only a decisive fall below ₹331 will have bearish implications and pull the stock down to ₹320 or ₹310 in the short term.

Infosys make a U-turn

After recording a new all-time high at ₹1,219 last Monday, the stock did a volte-face post its Q2 results. The stock continued its decline and plummeted 6.4 per cent last week accompanied by extraordinary volume . The key medium-term resistance is in the band between ₹1,170 and ₹1,180; this has restricted the stock from further rally. The medium-term uptrend that commenced from the July 2015 low of ₹932 appears to have come to an end and the stock has reversed its direction. Moreover, formation of a bearish engulfing candlestick pattern in the daily chart backs this reversal. The indicators and oscillators in the daily as well as weekly chart are heading downwards implying weakness. The short-term outlook for the stock is bearish. Traders can consider selling the stock with a stop-loss of ₹1,120. Targets are at ₹1,060 and ₹1,030. Significant resistances are pegged at ₹1,130 and ₹1,080 levels.

RIL breaches a key barrier

Last week, the stock of RIL managed to move past the key resistance at ₹900 as well as 200-day moving average by climbing almost 3 per cent. But this rally lacks volume strength. Continuation of the uptrend can take the stock northwards to ₹930 and ₹940 levels in the short term. Traders with high risk appetite can initiate long position with a stop-loss at ₹898 levels. The stock just hovers above its 50 and 200-day moving averages. The relative strength index and the daily moving average convergence divergence are on the brink of entering the bullish zone from the neutral region. To revise this medium-term downtrend, the stock needs to decisively break the trend-deciding level of ₹940 for a rally to ₹970 levels. On the other hand, inability to extend the up move and a decisive fall below the immediate base level of ₹900 can drag the stock down to ₹880 and ₹860 levels. Subsequent supports are at ₹840 and ₹826.

Tata Steel remains volatile

Following a strong rally, the stock became volatile last week and formed a spinning top candlestick pattern, implying indecision. The stock closed marginally on a positive note. The indicators in the daily chart feature in the positive territory backing the uptrend. So, traders with a short-term perspective can initiate long position with a bit of caution, given the volatility. Stop-loss can be maintained at ₹235. The resumption of the near-term uptrend that has been in place from late September can take the stock northwards to ₹265 and then to ₹280 levels. On the other hand, failure to sustain the uptrend can drag the stock down to the immediate support level of ₹230 and then to ₹215 in the short term. The medium-term trend has been down from the early May peak of ₹384. Only a decisive breakout of a key resistance band between ₹290 and ₹300 will alter this downtrend.

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