Technical Analysis

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

GURUMURTHY K BL Research Bureau | Updated on January 19, 2018 Published on January 31, 2016






SBI failed to sustain higher after opening on a positive note last week. The stock fell from the high of ₹188.8 to close lower by 2.4 per cent on the end of the week. The overall outlook remains weak. Key resistance to watch is at ₹186. Inability to break above this resistance can drag the stock lower to ₹177 and then to ₹172 and ₹170. Traders with a short-term view can wait for a rise and go short if the stock reverses lower from ₹186. Stop-loss can be kept at ₹193 for the target of ₹172. The downside pressure will ease in the near term if the stock manages to surpass the resistance at ₹186. The next target will be ₹192. Further break above ₹192 can take it even higher to ₹197 — the 21-day moving average. The price action in the coming weeks will need a close watch as the stock is moving closer to a key long-term support poised at around ₹165. The possibility of the downtrend that began had begun from in January 2015 to halting at this support cannot be ruled out.

The stock of ITC surged 3.5 per cent last week. The stock has closed decisively above the 21-day moving average at ₹316, which is expected to provide support this week. Though a test of this support looks likely in the initial part of the week, the outlook will turn negative only on a strong fall below this level. A reversal from ₹316 can take the stock higher to ₹325 and ₹328 once again. Traders with a short-term perspective can wait for dips and go long on a reversal from ₹316. Stop-loss can be placed at ₹311 for the target of ₹325. The 21-week moving average at ₹329 is an important resistance for the stock. A strong break above this level can increase the momentum and take the stock further higher to ₹340 there after. On the other hand, if ITC breaks and closes decisively below the support at ₹316, it can fall to ₹310 immediately. In such a scenario, the stock will remain under pressure to test even ₹305 and ₹302 levels on the downside.

Infosys has closed on a strong note last week. The sharp 3 per cent rally on Friday has helped the stock break a key resistance at ₹1,150 and close 2.5 per cent higher for the week. Formation of a flag for about two weeks followed by a sharp rally on Friday suggests that the outlook is bullish and the up move has resumed. Immediate support is at ₹1,150 and then at ₹1,130. Key short-term support is between ₹1,110 and ₹1,100. While trading above these supports, Infosys can rally to ₹1,185 and ₹1,200. A strong break above ₹1,200 will then pave way for the rally to extend to ₹1,235 and ₹1,250 thereafter. Short-term traders can go long. Stop-loss can be placed at ₹1,125 for the target of ₹1,220. Intermediate dips to ₹1,150 and ₹1,130 can be used to accumulate long position. The outlook for the stock will turn bearish for a fall to ₹1,070 and ₹1,050 only if it declines below ₹1,100. But such a strong fall looks unlikely at the moment.

The stock of Reliance Industries has managed to climb back decisively above the psychological ₹1,000 mark and close 3.5 per cent higher in the past week. Fresh buying interest at around ₹1,000 and a subsequent strong reversal from the recent low of ₹978 is a positive for the stock. It suggests that the stock is all set for a fresh rally. Immediate support is at ₹1,020 and strong support is available between ₹1,000 and ₹990. Dips to these supports are more likely to find fresh buyers in the market. An immediate rise to ₹1,050 looks likely. Further break above ₹1,050 can take RIL higher to ₹1,080-₹1,090 once again. Traders with a short-term view can go long. Stop-loss can be kept at ₹1,010 for the target of ₹1,080. Dips to ₹1,020 can be used to accumulate long positions. The short-term outlook will turn negative only if the stock records a decisive close below ₹990. Then, the pressure will increase on RIL for a fall to ₹950.

Tata Steel gave back most of its gains in the last two trading days to close 1.2 per cent higher for the week. Inability to sustain higher after breaking above the key resistance at ₹256 and a subsequent reversal thereafter leaves the immediate outlook unclear for the stock. Traders can stay out of the market until a clear trading signal emerges. As long as it trades below ₹256, a fall to ₹245 and ₹243 cannot be ruled out this week. The downside pressure would increase if Tata Steel falls below ₹243. Such a fall will increase the danger of the stock extending its downmove to ₹230 or even ₹225 in the short term. On the upside, key resistances are at ₹256 and ₹259. A strong break and a decisive close above ₹259 are needed for the stock to gain momentum. This break can take the stock higher to the levels of ₹266 and ₹270 — the 200-day moving average resistance there after.

Published on January 31, 2016

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