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

SBI hovers above a crucial support (₹184.4)

SBI fell for the second consecutive week. It broke below its important support at ₹182 to a low of ₹178.6. However, it managed to reverse higher from this low to close above ₹182 at ₹184.4, down 2.4 per cent for the week. Though the bounce back is easing the downside pressure to some extent, the stock has to sustain above ₹180 to avoid further fall . Whether SBI remains above ₹180 or falls below it will decide the move for this week. So traders can wait on the sidelines until a clear trend emerges. A rise to ₹188 and ₹191 is possible this week. A strong break above ₹191 will boost the momentum and take SBI higher to ₹200. On the other hand, a strong break and a decisive close below ₹180 will give bears an upper hand. In such a scenario, the stock will come under pressure and fall to ₹175 . If the stock continues to decline below ₹175, then ₹169can be tested thereafter.

ITC trades under pressure (₹317.2)

ITC was under pressure last week as it stopped its cigarette production following the Supreme Court order to comply with new pictorial warnings. The stock fell to a low of ₹306 but managed to recover some loss and close 2.3 per cent lower for the week. Immediate resistance is at ₹. A strong break above it would ease the downside pressure and take the stock higher to ₹335 or even ₹340 in the short term. Traders with a short-term perspective can wait and go long after the stock breaks above ₹324 decisively. Stop-loss can be placed at ₹318 for the target of ₹337. Revise the stop-loss higher to ₹323 as soon as the stock moves to ₹330. Inability to break above ₹324 can keep the stock under pressure. In such a scenario, the stock can fall back to ₹318 — the 21-week moving average support. A decisive weekly close below ₹318 can see ITC testing ₹300 on the downside.

Infosys may extend its downmove (₹1,181.45)

Infosys, as expected, fell in the past week to test ₹1,170. It has bounced back from the intraweek low of ₹1,171 to close 2.4 per cent lower for the week. But this reversal lacks strength, which makes the stock susceptible to a fall below ₹1,170. Such a break can drag it to ₹1,150. Further break below ₹1,150 can take it to ₹1,120 or ₹1,115-. Short-term traders with high risk appetite can go short. Stop-loss can be kept at ₹1,210 for the target of ₹1,130. An immediate break below ₹1,115 looks less probable. A reversal from ₹1,115 can take Infosys higher to ₹1,150 and ₹1,170 levels once again. On the other hand, if the stock manages to sustain above the immediate support at ₹1,170, a rise to ₹1,200 is possible. The region between ₹1,200 and ₹1,215 is an important resistance. Only a strong break above ₹1,215 will ease the downside pressure and take it higher to ₹1,250 once again.

Bearish outlook is intact for RIL (₹969.15)

RIL extended its fall last week by1.4 per cent . The bearish outlook remains intact. Support is around ₹950, which can be tested this week. A break below this can take it lower to ₹930. Further break below ₹930 will increase the danger of a fall to ₹900 or even lower thereafter. The ₹1,000-₹1,020 region will be an important resistance. Rallies to this zone may continue to attract fresh selling interest in the stock. Short-term traders can make use of such rallies to go short near ₹1,000. Stop-loss can be placed at ₹1,030 for the target of ₹945. As mentioned in this column last week, the consecutive fall in the last three weeks has increased the possibility of the long-term range-bound move between ₹800 and ₹1,100 to resume. So as long as RIL trades below ₹1,000, declines to ₹850 or even lower in the coming weeks cannot be ruled out.

Corrective fall begins in Tata Steel (₹329.45)

As expected, Tata Steel has begun its corrective fall last week. The stock tumbled 6 per cent and has closed decisively below the 21-day moving average. A fall to ₹310 and ₹305 — the 38.2 per cent Fibonacci retracement support — is possible in the coming days. Resistance is around ₹340 which can cap the upside in the near term. However, the region between ₹300 and ₹295 will be a strong medium-term support. Though a test of this support zone cannot be ruled out, the stock is more likely to reverse higher again from here going forward. Investors with a medium-term perspective who have taken long positions last week at ₹340 can hold it. Revise the stop-loss lower to ₹285 and make use of dips to ₹310 and ₹300 to accumulate long positions. Investors who are not holding any positions can make use of dips to go long near ₹310.

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