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

SBI (₹171.45)

SBI plunged 7 per cent last week, falling below its key short-term support level of ₹178. A very crucial support is poised between ₹169 — the 61.8 per cent Fibonacci retracement level — and ₹167. Inability to reverse higher from ₹167 may exert pressure on the stock. A strong break and a decisive daily close below ₹167 can take SBI lower to ₹163 or even ₹160 in the short term. On the other hand, a reversal from ₹168 will give some breather to the stock and trigger a corrective rally to ₹175 and ₹178. If the stock manages to rise past ₹178, it would ease the downside pressure and take it higher to ₹185. Such a rally will reduce the possibility of seeing a fresh fall once again. The price action in SBI in the coming week will be crucial to watch. Whether it will break below ₹167 or not will decide the next leg of move. From the charts, the level of ₹167 looks to be a strong support and an immediate break below this support level looks less probable.

ITC (₹329.95)

ITC has been stuck between ₹306 and ₹338 for more than two months now. Technically, the stock is wedged between the 21- and 100-week moving averages at ₹319 and ₹337, respectively. Though the stock had broken below ₹319 several times, it did not record a weekly close below it. This paves the way for ITC to break out of its range above ₹337. Such a break can take it to ₹340 or ₹345 in the short term. Also, a decisive weekly close above ₹337 will confirm the range breakout and ease the downside pressure. In such a scenario, ITC can target ₹360. Investors with a medium-term perspective can make use of dips to go long near ₹320. Stop-loss can be placed at ₹299 for the target of ₹355. Accumulate long positions if the stock breaks below ₹319 and declines to ₹310 or ₹305. The bullish outlook will get negated if the stock records a decisive close below the 21-week moving average. However, the outlook will turn negative only if ITC declines below ₹300 decisively.

Infosys (₹1,201.75)

Infosys is not gaining momentum to extend its upmove above ₹1,200, though it did manage to sustain above this psychological level last week. The stock is facing resistance around ₹1,220. Another trend line resistance is at ₹1,230. So the stock will gain bullish momentum only on a strong rise above ₹1,230. The next targets will be ₹1,250 and ₹1,270. But the price action on the charts signals less probability of such a rally in the near term. Support is at ₹1,190 — the 55-day moving average which is likely to be tested this week. A strong break below it can drag the stock lower to ₹1,150 and ₹1,130. Traders with a short-term perspective can go short on a break below ₹1,190. Stop-loss can be placed at ₹1,215 for the target of ₹1,150. The 200-day moving average is at ₹1,128, which is significant support level to watch. A reversal from it can trigger a corrective rally to ₹1,170 and ₹1,180. But a break below it can drag Infosys to ₹1,100 or even lower.

RIL (₹934.1)

After two weeks of consolidation, the downtrend has resumed in RIL. The stock tumbled 4.7 per cent last week. The next support is near the current levels at ₹931. If it holds, RIL can see a corrective rally to ₹950 or ₹960. But the view will continue to remain bearish and the upside is likely to be limited to ₹960. A subsequent reversal will trigger a fresh fall to ₹900 — the key 200-week moving average support level thereafter. While a fall to ₹900 looks likely in the short term, whether RIL breaks below it or not will decide the next leg of move. A reversal from ₹900 can keep the stock range-bound between ₹900 and ₹950 for some time. But a break below ₹900 will increase the danger of it falling further to ₹850 or even ₹800. RIL has been broadly range-bound between ₹800 and ₹1,100 in the long-term time frame. So, as reiterated in this column, over the last few weeks, the possibility of RIL falling to ₹850 and ₹800 in the coming weeks cannot be ruled out.

Tata Steel (₹322.9)

Tata Steel was range-bound between ₹320 and ₹337 for the second consecutive week. A breakout on either side of this range will decide the next move. The presence of the 21-day moving average near ₹337 makes it less probable for the stock to break above ₹337 immediately. Also, since the stock had witnessed a strong rally from ₹211 in February to ₹364 in April, technically, some more corrective fall can be expected. So, in the short term, Tata Steel can break below ₹320 and fall to test ₹306. As mentioned in this column last week, ₹300-₹295 is a strong support zone which can halt the fall. A subsequent reversal thereafter may trigger a fresh leg of upmove in the stock. Hold the long positions with the same stop-loss at ₹285. Accumulate longs on dips to ₹310 and ₹300. Investors who are not holding any positions can make use of dips to go long near ₹310 with the same stop-loss at ₹285.

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