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

SBI (₹156.2)

Although the stock of State Bank of India rose almost 3 per cent on Friday, it ended the week on a negative note, falling 5 per cent. Both the short and medium-term trends are down for the stock. It continues to test the significant long-term support between ₹150 and ₹160. But the daily relative strength index as well as price rate of change indicators continue to display positive divergence, implying that trend reversals could be on the cards. The daily volume has been high since mid-January. An upward reversal from the current support zone can take the stock northwards to ₹174 initially. Subsequent rally above this resistance can pave way for an up move to ₹185 and ₹200 in the short to medium term. Therefore, traders with a high-risk appetite can make use of dips to buy the stock with a revised stop-loss at ₹150. But, a decisive plunge below ₹150 can drag it down to ₹140 and ₹130.

ITC (₹291)

Last week, the stock of ITC plunged 4.5 per cent negating the hammer candlestick pattern (implying bullishness) formed a week before. Moreover, this fall has breached a key support at ₹300 and strengthened the medium-term downtrend. The short and medium-term trends continue to be down. As long as the stock trades below ₹306, its short-term downtrend will remain intact. The daily relative strength index has re-entered the bearish zone from the neutral region. The weekly RSI has entered the bearish zone. Other indicators in the daily chart feature in the negative territory backing the stock’s downtrend. Traders with a short-term view can sell the stock in rallies with a stop-loss at ₹300. Continuation of the downtrend can test supports at ₹285 and ₹275. A breakthrough of ₹306 can alter the downtrend and take the stock to ₹317. Next key medium-term resistance is at ₹331.

Infosys (₹1,121)

The stock of Infosys was choppy and ended the week on a marginally negative note. The key resistance at ₹1,130 limited the stock’s upside last week. It continues to test this resistance level. A decisive breakthrough of ₹1,130 can take the stock northwards to the key long-term resistance band between ₹1,160 and ₹1,170. The medium-term trend continues to be up. However, the short-term trend is unclear. The indicators and oscillators in the daily chart show mixed signals. Traders with a short-term horizon can initiate long position above ₹1,130 with a stop-loss at ₹1,110. Conclusive break of ₹1,170 will reinforce the uptrend and push the stock up to ₹1,200 or ₹1,220 levels. On the other hand, a slump below the immediate support at ₹1,100 can pull it down to ₹1,070. Declines below ₹1,070 can take the stock lower to ₹1,040 and then to the level of ₹1,010.

RIL (₹950.5)

The stock of Reliance Industries was volatile but closed the week on a marginally positive note. Both the daily and weekly relative strength indices hover in the neutral region. Other indicators in the daily chart are showing mixed signals. The stock has been in a short-term downtrend since January peak of ₹1,089. This downtrend will stay in place as long as the stock trades below ₹990, a key trend-deciding level. Inability to move past the immediate resistance at ₹965 or the next one at ₹990 can lead to the resumption of the downtrend and drag the stock down to ₹920. A plunge below ₹920 will reinforce the bearish momentum and pull the stock down to ₹900 or to ₹875 in the short term. However, a significant breach of ₹990 will alter the downtrend and take the stock higher to ₹1,010 and ₹1,035. Hence, traders with a short-term perspective should tread with caution in the coming week.

Tata Steel (₹248.4)

Last week, the stock of Tata Steel fell almost 2 per cent amidst volatility. The 200-day moving average poised around ₹200 limited the stock’s up move. To strengthen the short-term uptrend, it needs to decisively move above ₹260 for a rally to ₹275. Traders with high risk appetite can buy if the stock rallies above ₹260 with a fixed stop-loss. The stock has been on an intermediate-term sideways consolidation phase in the wide range between ₹200 and ₹275 since August 2015. An emphatic break-out of the upper boundary at ₹275 can take the stock up ₹300 or ₹313 in the medium term. However, failure to move beyond ₹275 can retain the sideways move for some more time. Significant supports below ₹235 are placed at ₹225, ₹210 and ₹200. Break of the lower boundary at ₹200 can pull the stock down to ₹180 or ₹170 in the same period.

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