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

Moving average resistance halts the rally in SBI (₹180.35)

The rally in SBI paused last week. The stock reversed lower from its high of ₹189.8 to close 4.3 per cent lower. The 55-day moving average at ₹184 is stopping the stock from rising further. A strong break and a decisive close above this resistance is needed for the stock to gain momentum. Such a break will also increase the possibility of the stock breaking above the 38.2 per cent Fibonacci retracement resistance at ₹188. This resistance capped the stock’s upside last week. The next target will be ₹200 which is the 50 per cent Fibonacci retracement resistance level. Traders can wait for a strong break and close above the 55-day moving average to initiate fresh long position. Stop-loss can be kept at ₹179 for the target of ₹195. The stock will come under pressure if it declines and closes decisively below ₹180. In such a scenario, the stock can fall to ₹171. Further break below ₹171 will increase the danger of the fall extending to test the 21-day moving average support at ₹167.

Rounding pattern signals an of rally in ITC (₹321.1)

The stock of ITC was range-bound between ₹313 and ₹325 in the past week and managed to close 1.6 per cent higher for the week. Cluster of resistances are between ₹322 and ₹325, which caps the upside for the stock. However, the price action on the daily chart suggests a continuation pattern. It also leaves open the possibility of the stock breaking above ₹325. Such a break will boost the momentum and take ITC higher to ₹330 — an important trend-line resistance. If the stock manages to surpass this resistance, then the rally may extend to ₹335 and ₹340. Short-term traders can make use of dips to go long near ₹315 with a tight stop-loss at ₹311 for the target of ₹328. On the other hand, a reversal from ₹330 can trigger a pull back move to ₹325 and ₹320 once again. The 55-day moving average at ₹313 is an important support for the stock. The outlook will turn negative on a strong break below this support level. The next targets on the downside are ₹310 and ₹306.

Infosys to remain range-bound with a bullish bias (₹1,142.5)

Infosys has failed to rise past its resistance at ₹1,190 once again. The stock made a high of ₹1,190 on Tuesday and fell back to close 2.4 per cent lower for the week. There is a strong likelihood of the stock remaining range-bound in the short term between ₹1,090 and ₹1,190. Within this range, the possibility is high for Infosys to move down towards ₹1,090 — the lower end of the range. Intermediate supports within the range are between ₹1,125 and ₹1,105. Short-term traders with high risk appetite can play the range. Wait for dips and go long near ₹1,100 with a tight stop-loss at ₹1,070 and for the target of ₹1,150. A breakout on either side of ₹1,090 and ₹1,190 will decide the next leg of move for the stock. A fall below ₹1,090 will see the stock falling to ₹1,050 and ₹1,030. On the other hand, a decisive break above ₹1,190 can take the stock higher to ₹1,250. On the chart, the bias is positive for the stock to break above ₹1,190 and rise to ₹1,250 in the short term.

Short-term outlook is bullish for RIL (₹1,015.65)

The stock of Reliance Industries extended its upmove in the initial part of last week to a high of ₹1,045 which is intra-week high. However, the stock reversed lower from this high to give back most of its gains and close with a mild gain of 0.9 per cent for the week. The stock trades above its 50 and 200-day moving averages. The overall outlook is bullish. Immediate support is at ₹1,000 and the next short-term support is at ₹980. Though these supports might be tested this week, a break below these levels looks less probable. A reversal from the supports can take the stock higher to ₹1,040 and ₹1,050 levels once again. A strong break above ₹1,050 will see the rally extending to ₹1,080. Short-term traders can wait for dips to go long near ₹1,000 with a stop-loss at ₹970 for the target of ₹1,050. Accumulate long positions if the stock breaks below ₹1,000 and declines to ₹980. The outlook will turn negative if it declines below ₹980; next targets will be ₹960 and ₹950.

Supports at ₹280-₹275 to limit downside in Tata Steel (₹294.45)

The rally in Tata Steel is facing psychological resistance near ₹300. The stock touched a high of ₹301 and fell back to close below ₹300 at ₹294, up 2.4 per cent for the week. The overall outlook is bullish. But inability to break above ₹300 decisively will leave open the possibility of a corrective fall. A fall to ₹285 and ₹280 is possible. If the stock breaks below ₹280, the fall can extend to test ₹275. The ₹275- 280 range provides strong support and a break below this zone looks unlikely. A reversal from here can take the stock higher to ₹300 once again. A strong break above ₹300 will boost the upside momentum. Such a break can take the stock higher to ₹314 — the 61.8 per cent Fibonacci retracement resistance level in the short term. Investors with a medium-term perspective can go long at current levels. Stop-loss can be kept at ₹260. Intermediate declines to ₹280 and ₹275 can be used to accumulate long positions.

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