Technical Analysis

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

Gurumurthy K | Updated on January 20, 2018 Published on May 14, 2016






SBI is stuck in a narrow range

SBI (₹185)

SBI was range-bound between ₹184 and ₹190 last week. A breakout on either side of this range will decide the next leg of move for the stock. Traders can stay on the sidelines and wait for a breakout from the range to give a clear trade signal. A break below ₹184 can drag SBI lower to ₹180 and ₹178 — an important short-term support. A strong break below ₹178 will increase the downside pressure. Such a break can take the stock lower to ₹171 or even to ₹167. On the other hand, SBI can gain strong bullish momentum if it manages to break the current range above ₹190. This will pave the way for a rally to ₹198 and ₹202. Further break above ₹202 can take the stock to the next important resistance at ₹205. Inability to break above ₹205 can trigger a corrective fall thereafter. Traders with a short-term perspective and high risk appetite can go long on a break above ₹190. Stop-loss can be kept at ₹184 for the target of ₹200.

A key resistance at ₹326 caps the upside for ITC

ITC (₹319.3)

News that ITC has resumed cigarettes production triggered an initial rise in the stock price. But the impact of the news was short-lived as the stock lost momentum and reversed lower from the high of ₹326. The 200-week moving average resistance at ₹326 is an important level. A strong break above this hurdle can boost the momentum. Such a break will ease the downside pressure and take ITC higher to ₹333 and ₹337 thereafter. Short-term traders can go long on a strong break above ₹326. Stop-loss can be kept at ₹319 for the target of ₹336. If ITC fails to break above ₹326, it can be under pressure. Immediate support is at ₹315. A strong break below it can take the stock lower to ₹310. Possibility of a revisit to ₹305 or even ₹300 is high. The levels of ₹300 and ₹326 are the key medium-term support and resistance respectively. The medium-term trend will be clear only after ITC breaks out on either side of this range.

Infosys can rise further if it sustains above ₹1,190

Infosys (₹1,206.7)

Infosys managed to rally last week, contrary to our expectation. The stock made a high of ₹1,216 on Tuesday and hovered around the psychological ₹1,200 level for the rest of the week. It has managed to close above ₹1,200 level at ₹1,206, up 2 per cent for the week. Immediate support is at ₹1,190. If the stock manages to sustain above this support, a rise to test the next resistance at ₹1,229 is possible in the coming week. A strong break above ₹1,229 will ease the downside pressure and open doors for a further rally to ₹1,250 or even ₹1,270. On the other hand, a break below ₹1,190 can take Infosys lower to ₹1,180 — an important near-term support. Declines below this level can drag the stock to ₹1,150 thereafter. Such a fall will turn the medium-term outlook negative. Inability to reverse higher from ₹1,150 will increase the possibility of the stock falling to ₹1,125 or even ₹1,100 over the medium term.

RIL faces resistance between ₹1,000 and ₹1,010

RIL (₹978)

The downtrend in RIL has paused. The stock is consolidating above the 200-day moving average support poised at ₹967. Moving average resistances are placed between ₹1,000 and ₹1,010. The 38.2 per Fibonacci retracement resistance also occurs in this zone, adding to its significance. While the stock might test this resistance zone in the near term, an immediate break above ₹1,010 looks less probable. Inability to break above ₹1,010 and a subsequent reversal from there can take the stock lower to test the 200-day moving average support. It will also leave open the possibility of a decline below this support. The next targets will be ₹930 and ₹900. Declines below ₹900 can drag it further down to ₹850 and ₹830. However, the threat of seeing a further fall in RIL will ease if it manages to decisively cross the hurdle of ₹1,010. Such a break can once again take the stock higher to ₹1,030 or even ₹1,050.

Corrective fall to extend in Tata Steel

Tata Steel (₹323)

The corrective downtrend in Tata Steel continues. The stock has been facing strong resistance near ₹337. The near-term outlook is bearish. The stock can extend its fall in the coming days to ₹310 or even ₹305 — the 38.2 per cent Fibonacci retracement resistance level. However, the medium-term outlook remains bullish with a strong support between ₹300 and ₹295. This support zone can halt the corrective fall. So, declines to ₹300 will be a good buying opportunity for medium-term investors. Hold the long positions at ₹340 and retain the stop-loss ₹285. Add long positions on dips to ₹310 and ₹300. Investors can use of dips to go long near ₹310 with the same stop-loss at ₹285. A reversal from the ₹300-₹295 zone can take Tata Steel higher to ₹350 once again. A strong break and decisive weekly close above ₹350 will pave the way for the next targets of ₹385 and ₹400.

Published on May 14, 2016

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