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

SBI (₹184.3)

Last week, the stock of SBI plunged 7 per cent to mark an intra-week low at ₹171.6 but, it bounced back, smartly recovering the entire loss to close on a flat note. With this volatility, the stock has formed a dragonfly doji pattern in the weeklychart implying bullishness. Moreover, the relative strength in the daily chart displays positive divergence indicating trend reversal and recovery from the oversold territory. There is an increase in daily volume over the past three weeks. The stock is on a recovery mode, after knocking the lower boundary of the Bollinger Bands. Though the indicator and oscillators in the daily chart continue to feature in the negative territory, there are signs of recovery. So, traders with a short-term perspective can take a contrarian view and consider buying it with a stop-loss at ₹170. Near-term targets are ₹200 and ₹210. To alter the short-term downtrend, it needs to decisively move above ₹220. Support below ₹170 is at ₹150.

ITC (₹308.6)

The stock of ITC was volatile and fell 1.6 per cent in the week ago. This fall has breached the immediate support at ₹311. Both medium and short-term trends are down for the stock. It trades well below its 50 and 200-day moving averages. The indicators in the daily chart feature in the bearish zone implying weakness. The weekly moving average convergence divergence indicator has re-entered the negative territory. The daily and weekly price rate of change indicators hover in the negative terrain, signifying selling interest. As long as the stock trades below ₹320, its short-term trend will be down. Traders with a short-term view can make use of rallies to initiate fresh short position with a stop-loss at ₹317. An emphatic fall below the immediate support level of ₹300 can drag the stock down to ₹290 and ₹285 levels. On the other hand, key resistance above ₹320 is placed at ₹335. To alter the medium-term downtrend, it needs to move past ₹335 levels.

Infosys (₹1,135.9)

After encountering a key resistance in the band between ₹1,160-1,170, the stock continues to test and move sideways. It was choppy and closed marginally on a negative note in the prior week. The stock has formed a spinning top candlestick pattern in the weekly chart implying indecision. Moreover, the range ₹1,160-1,170 is a significant resistance band from which the stock has reversed downwards earlier cases. Therefore, traders should trend with caution as long as the stock tests the resistance range. The short term trend is up. The stock trades well above its 50 and 200-day moving averages. Fresh long position is recommended only on a strong rally above ₹1,170 with a fixed stop-loss. Targets are ₹1,200 and ₹1,220. On the other hand, the stock has immediate supports at ₹1,120 and ₹1,100. A conclusive fall below the second support will start diminishing the bullish momentum and drag the stock down to ₹1,060 or ₹1030 levels in the short term.

RIL (₹1,003.9)

The stock of Reliance Industries failed to sustain its bullish momentum and tumbled 6.4 per cent breaching its 21-day moving average at around ₹1,023 in the previous week. If found support in the band between ₹900 and ₹1,000 and tests it. The relative strength index in the daily chart has entered the neutral territory and hovers in this region. The weekly RSI has re-entered the neutral region. Short-term uptrend is weakening. Hence, traders with a short-term view should tread with caution in the coming week. A strong slump below the support level of ₹990 will mar the uptrend and drag the stock down to ₹966. Further decline below ₹966 will alter the medium-term uptrend and pull the stock further down to ₹940 or ₹915. A conclusive rally above ₹1,050 once again will indicate that the stock is gaining momentum. An up move to ₹1,080 is possible. Only a conclusive breakthrough of ₹1,100 will take the stock to the ₹1,140-₹1,150 band in the medium term.

Tata Steel (₹247.1)

The stock’s 5.4 per cent rise on Friday boosted its weekly gains to 7.5 per cent. This rally has breached the 50-day moving average. Since August 2015, the stock has been on a sideways consolidation phase in the ₹200-270 range. Within this band, the short-term trend varies. There has been an increase in trade volume since early January. The indicators in the daily and weekly charts are featuring in the neutral region, without any bias. The stock now faces resistance at ₹250. Traders with high-risk appetite can initiate long position on a rally above ₹250 while maintaining stop-loss at ₹242. Targets are ₹263 and ₹270. Significant supports are at ₹238 and ₹225. Strong fall below ₹225 can drag it to ₹213 and then to ₹200 levels. A conclusive breakthrough of the wide trading range will decide the stock’s next medium term trend.

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