Technical Analysis

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

Yoganand D | Updated on January 24, 2018 Published on May 31, 2015






SBI remains in a indecisive mode

In the week ago SBI was volatile and fell just 1.5 per cent. The stock has been testing its 50- and 200-day moving average lines over the past five trading sessions. Moreover, there is a formation of a spinning top candlestick pattern in the weekly chart implying indecisiveness. Hence, traders with a short-term perspective should tread with caution as long as the stock moves sideways in the band between ₹274 and ₹285. However, on the upside, the stock has another significant resistance ahead at ₹290. A decisive breakthrough of ₹290 level is required to reinforce the bullish momentum and take the stock higher to ₹300 and ₹310 in the short term. Strong plunge below the immediate support level of ₹274 can add selling pressure and pull the stock down to ₹270 and then to ₹260. In that scenario, initiate short position with a stop-loss at ₹280.

ITC makes a bounce back

The stock of ITC was also volatile in the prior week, after an initial decline it tested the lower boundary at ₹316 and bounced up. Now, the stock faces a key resistance ahead at around ₹331. An emphatic breakthrough of the immediate resistance at ₹331 can strengthen the bullish momentum and push the stock higher to ₹338 and then to ₹350 in the short term. Trader with a short-term view can consider buying the stock on such break with a stop-loss at ₹325 levels. Conversely, if the stock breaks the key support level of ₹316, can pull it down to ₹308 and ₹300 band, which is a significant medium-term support band. The medium-term trend is down. The stock needs to emphatically breach the resistance band between ₹350 and ₹355 to alter the trend and then take it northwards to ₹370 and ₹380 levels in the medium term.

Infosys faces key resistance ahead

Last week, the stock was choppy and closed marginally on a negative note. It tests its 200-day moving average as well as a resistance at ₹2050 levels. The indicators as well as oscillators on the daily chart are trending upwards, cushioning the ongoing near-term up move. Strong rally above the immediate resistance level of ₹2050 will have bullish implications and take the stock northwards to ₹2,150 and ₹2,250 levels. Traders holding their long position can continue while retaining the stop-loss at ₹1950 levels. Investors with a medium-term perspective can also buy the stock while maintaining a deep stop-loss at ₹1,900 levels. A strong breach of the key level at ₹2,250 can push the stock higher to ₹2,350 in the medium term. Nevertheless, a plunge below the significant support level of ₹1,900 will strengthen the bearish momentum and drag the stock down to ₹1,800 or ₹1,700 in the medium term.

RIL reverses down from a key hurdle

The stock of RIL tested the key resistance at ₹900 in the previous week and slumped 2.8 per cent. Only a conclusive breakthrough of this hurdle can strengthen the stock’s bullish momentum and take it higher to ₹920 and ₹940 levels in the short term. But, last weeks downward reversal shows weakness. The stock now hovers above an immediate support level of ₹870. A downward break will lead to further decline to ₹850 levels in the near term. Traders can initiate short position on a fall below ₹870 with a stop-loss at ₹880 levels. Further decline can happen on a decisive fall below ₹850, to ₹830 and then to ₹810 in the coming weeks. The stock has been in a sideways consolidation phase in a broad band between ₹810 and ₹940 since December 2014. Investors should remain on the sidelines until a clear trend emerges.

Tata Steel in a downtrend

Tata Steel extended its decline by plunging 3.8 per cent decisively breaching an immediate support level at ₹340 last week. The stock is now heading towards the next support level at ₹320 and ₹310. Traders with a short-term perspective can hold their short position and also initiate fresh short position with as top-loss at ₹340 levels. The medium- as well as intermediate-term trend continue to be down. The short-term trend for the stock appears to be turning bearish. The indicators and oscillators in the daily chart are featuring in the bearish zone. As long as the stock trades below the significant resistance level at ₹360 the short-term trend will remain down. The medium-term trend will remain down until ₹380 resistance is broken. Next medium-term resistances are pegged at ₹400 and ₹420.

Published on May 31, 2015
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