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

SBI (₹164.6)

The stock of SBI surged 6.3 per cent last week, snapping its losing streak since the start of 2016. There has been an increase in volume over the past one month. The medium as well as short-term trends are down. However, the stock found support at a significant long-term support between ₹150 and ₹160. The daily relative strength index and price rate of change indicator display positive divergence, signifying trend reversal. These indicators in the weekly chart began to recover. Traders with a short-term perspective can consider buying the stock in dips while maintaining stop-loss at ₹155. Continuation of the current up move can take the stock higher to ₹174. Strong move above this level can encounter resistances at ₹185 and ₹200. Conversely, a slump below the key level of ₹150 can pull the stock down to ₹140 and ₹130.

ITC (₹304.8)

After slipping below the significant long-term support at ₹300, ITC marked an intra-week low at ₹289 and bounced back to close in the green. The stock advanced 1.5 per cent last week. It formed a hammer candlestick pattern in the weekly chart, indicating bullishness. While the medium and short-term trends are down, the key support at ₹300 appears to have cushioned the decline. The daily relative strength index displayed a positive divergence and entered the neutral region from the bearish zone, signalling a trend reversal. Short-term traders with high risk appetite can buy it with a stop-loss at ₹295. It can move to ₹310 initially and then to ₹317 in the short term. A decisive rally above ₹317 is needed to alter the short-term downtrend and take it northwards to ₹331. Strong plunge below ₹300 can pull it down to ₹290 and then to ₹275.

Infosys (₹1,125.5)

The stock of Infosys gained 3.8 per cent last week, moving above the key resistance in the ₹1,100-₹1,110 band. This rally has negated the bearish outlook on the stock. It is currently testing another resistance at ₹1,130. Break of this level can push the stock upwards to the key long-term resistance band between ₹1,160 and ₹1,170. With last week’s bounce back, the medium-term uptrend of the stock has gained momentum. Traders can initiate long position above ₹1,130 with a stop-loss at ₹1,110. Strong rally above ₹1,170 will strengthen the uptrend and take it higher to ₹1,200 or ₹1,220 levels. But a fall below ₹1,100 will have bearish implications and pull the stock down to ₹1,070, where its 200-day moving average is poised. Further decline below ₹1,070 can drag the stock down to ₹1,040 and then to the level of ₹1,010.

RIL (₹944.5)

Last week, the stock of Reliance Industries bounced back gaining 4.2 per cent. But this recovery lacks strength. The stock now tests its 200-day moving average and a key resistance at ₹965. Subsequent resistances are placed at ₹975 and ₹990. Since January peak of ₹1,089, the stock has been in a short-term downtrend. As long as the stock trades below ₹990, this downtrend will remain in place. The daily and weekly relative strength indices feature in the neutral region. If the stock reverses down from the immediate resistance at ₹965 or ₹990 it can fall to ₹920. An emphatic fall below ₹920 will reinforce the bearish momentum and drag the stock further down to ₹900 or even to ₹875 in the short term. Key resistances above ₹990 are at ₹1,010 and ₹1,035. Short-term traders should tread with caution in the coming week.

Tata Steel (₹253.2)

The stock of Tata Steel surged 16 per cent accompanied by strong volumes last week. This rally has altered the stock’s short-term downtrend. A strong move above ₹260 — where the 200-day moving average is poised — is required to strengthen the bullish momentum and take the stock northwards to ₹275. Since last August, the intermediate-term trend has been sideways in the ₹200-₹275 range. A conclusive breakthrough of the upper boundary at ₹275 can strengthen the bullish momentum and accelerate the stock to ₹300 or ₹313 in the medium term. But, inability to move past ₹275 can retain the sideway move for a while. Key supports below ₹235 are at ₹225, ₹210 and ₹200. An emphatic slump below ₹200 can drag the stock down to ₹180 or ₹170 in the medium term.

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