Technical Analysis

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

Gurumurthy K | Updated on January 20, 2018 Published on March 26, 2016

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SBI (₹196.8)

The short-term uptrend in SBI remains intact. The stock opened the week on a positive note and rose to an intraweek high of ₹198. It closed 3 per cent higher for the week. The 21-day moving average is on the verge of crossing the 55-day moving average. SBI can head towards its next important short-term resistances at ₹200 and ₹204, which are the 50 per cent Fibonacci retracement and the 21-week moving average level respectively. A pull back move after testing ₹204 cannot be ruled out. Series of supports are poised at ₹193, ₹192 and ₹190. Traders who have taken long positions last week can revise the stop-loss higher to ₹192 for the same target of ₹199. Others can make use of dips to go long at ₹193 with a stop-loss at ₹189 and for the target of ₹200. The stock will come under pressure only if it declines below ₹190. Such a break can take SBI lower to ₹187 initially. Further break below ₹187 can drag it lower to ₹180 and ₹178 thereafter.

ITC (₹324.4)

ITC failed to sustain the sharp rise on the opening day of the truncated week. It recorded a high of ₹336 but gave back all its gains and made an intraweek low of ₹320.4 before closing almost flat for the week. A key support is near current levels at ₹321 where both the 100- and 200-day moving averages are placed. Whether this support holds or breaks will decide the next move. A strong break below this support can drag the stock lower to ₹315 and ₹313. Further break below ₹313, if it happens, may take it to ₹310 or even lower. On the other hand, a reversal from ₹321 can take ITC back to ₹330 and ₹335. This will increase the possibility of the stock testing its important short-term resistance at ₹340. Formation of an inverted head and shoulder pattern suggests that the downside in this stock can be limited to ₹321 or ₹313. Medium-term investors can continue retain the stop-loss at ₹311 for the same target of ₹338.

Infosys (₹1,207.7)

As expected, Infosys breached its resistance at ₹1,195 last week. The bullish view remains intact. The level of ₹1,195 will now serve as a good resistance-turned-support for the stock. Immediate resistance is at ₹1,213. A strong break above it can take the stock up to ₹1,220 in the coming week. It will also keep the bullish view intact and the stock can test the next important trend resistance at ₹1,250. Traders who took long positions last week at ₹1,198 can hold it. Retain the stop-loss at ₹1,170 for the same target of ₹1,240. The near-term outlook will turn negative only if the stock falls below ₹1,195. Such a fall will take the stock lower to ₹1,150 and ₹1,130. But this looks unlikely. ₹1,250 is a very important trend resistance which is likely to hold at first. Hence a corrective fall to ₹1,200 from this resistance level cannot be ruled out. An eventual break above ₹1,250 will pave way for a fresh rally to ₹1,300 or even higher subsequently.

RIL (₹1,029.3)

Reliance Industries is retaining its ₹1,000 to ₹1,050 sideways range. The stock made an intraweek high of ₹1,052. But, then, it reversed sharply lower, giving back most of its gains and closed slightly higher for the week. Strong support is in the ₹1,010 and ₹1,000 zone which can be tested in the initial part of this week. An immediate fall below ₹1,000 looks less probable. A reversal from this support zone can take the stock higher to ₹1,050. A strong break and a decisive close above ₹1,050 will signal a range breakout. Such a break can take RIL to ₹1,090 thereafter. Traders with a short-term perspective can make use of dips to go long at ₹1,010. Stop-loss can be placed at ₹985 for the target of ₹1,050. The outlook will turn negative only on a strong break below ₹1,000. The next target on such a break will be ₹980. Further break below ₹980 will increase the danger of a down move to ₹960.

Tata Steel (₹316.6)

Tata Steel surged 4.8 per cent last week. The strong rally in the past week is strengthening the bullish trend in the stock that began from the low of ₹211. It has risen 50 per cent from this low. Both the short and medium-term outlook remain bullish. Key short-term supports are at ₹308 and ₹300, which are likely to limit the downside in the short term. With the stock closing on a stronger note for the fourth consecutive week, there is a lesser possibility for an immediate break below ₹300. Any intermediate dips to ₹308 or ₹300 can attract fresh buying interest. Having said this, a rise to ₹325 and ₹330 looks likely. Traders with a short-term perspective can go long. Stop-loss can be kept at ₹306 for the target of ₹330. Make use of declines to ₹310 to accumulate long positions. Medium-term investors can continue to hold their long position for the target of ₹340. Revise the stop-loss higher to ₹280 from ₹265.





Published on March 26, 2016

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