Technical Analysis

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

| Updated on January 13, 2018 Published on March 04, 2017






SBI (₹265.15)

The resistance at ₹275 capped the upside in SBI for the second consecutive week. The stock fell 2 per cent in the past week. A near-term dip to ₹260 is possible. Cluster of moving averages around ₹260 makes this level a strong support. A strong break and a decisive close below ₹260 may trigger fresh selling in the stock. Such a break will increase the possibility of the stock falling ₹245 or even ₹240 in the short term. Further fall below ₹240 looks less probable at the moment. On the other hand, if the stock reverses higher from ₹260, a rise to ₹270 and ₹275 can be seen once again. A strong break above ₹275 can target ₹290. The level of ₹290 is a key short-term resistance. A decisive break and close above this hurdle are needed for the stock to gain fresh momentum. Such a break can take SBI higher to ₹300 initially. Further break above ₹300 may target ₹327 over the medium term. Investors can hold the long positions. Accumulate on dips near ₹245 while retaining the stop-loss at ₹220. Revise the stop-loss higher to ₹230 as soon as the stock rises to ₹295.

ITC (₹261.95)

ITC traded volatile in the ₹258 and ₹270 range last week. A key support is at ₹257. If the stock manages to sustain above this level, a range-bound move between ₹257 and ₹270 is possible for some time. A breakout on either side of ₹257 or ₹270 will then decide the next trend. A strong break below ₹257 will increase the downside pressure andcan drag the stock lower to ₹249 or ₹246 in the short term. The presence of the 100- as well as the 200-day moving average around ₹246 implies there is lower possibility for the downmove to extend below this level at the moment. On the other hand, if ITC sustains above ₹257 in the coming days, a revisit of ₹270 is possible. A strong break above ₹270 may ease the downside pressure and take the stock higher to ₹275 and ₹280 initially. A strong break above ₹280 will pave way for the next targets of ₹290 and ₹300. As being reiterated in this column over the last few weeks, the region around ₹300 is a crucial resistance for ITC. Whether the stock manages to surpass this hurdle or not will be the deciding factor for the next move.

RIL (₹1,258.45)

RIL retained its momentum and surged over 6 per cent last week. The stock has skyrocketed 22 per cent in the last three weeks. The rally last week has taken the stock decisively above a key resistance around ₹1,210. It also marks the end of a multi-year sideways consolidation in the stock. The psychological level of ₹1,200 will now serve as a significant support. Any fresh fall is likely only if RIL breaks below ₹1,200 decisively. Such a break can take the stock to ₹1,170 or even lower . But such a fall looks less probable at the moment as the stock has breached above ₹1,200 with strong volumes. So, technically, any dips to ₹1,200, if seen, is likely to bring fresh buyers . Next resistance is at ₹1,300. Inability to break above this hurdle can keep the stock range-bound between ₹1,200 and ₹1,300 for some time. On the other hand, a strong break above ₹1,300 can take RIL higher to ₹1,350 initially. Further break above ₹1,350 will pave way for a rally to ₹1,500 or even higher. Medium-term investors can hold their long positions. Revise the stop-loss higher to ₹1,145.

Infosys (₹1,031.15)

The positive bias remains intact for Infosys. Though the stock opened with a gap-down and fell initially on Friday, it managed to bounce back smartly from the psychological ₹1,000 mark. The weekly chart remains strong. A rise to test the immediate resistance at ₹1,045 is likely in the near term. A strong break above ₹1,045 will clear the way for the next target of ₹1,075 and ease the downside pressure. If Infosys manages to breach ₹1,075, it can extend its up-move to ₹1,090 or even ₹1,100 thereafter. Such a rise will give an initial sign of a trend reversal. Long-term investors can hold the long positions taken last week. But if the stock fails to break above ₹1,045 and reverses lower, a downward move to ₹1,000 is possible initially. Further break below ₹1,000 can drag the stock lower to ₹950 or even lower thereafter. In such a scenario, a broad sideways move between ₹900 and ₹1,045 can be seen for some time. Such a fall to ₹950 or lower levels if seen will be a good opportunity for long-term investors to accumulate long positions.

Tata Steel (₹495)

Tata Steel extended its up-move for the second consecutive week, but at a slower pace. The stock rose 2 per cent to test ₹500 levels for the first time since September 2015. Though the stock has come off from the week’s high of ₹505 to close below ₹500, the overall outlook remains bullish. Key supports are at ₹480 and ₹470 which can limit the downside. Next significant support is around ₹455. The stock will come under pressure for a corrective fall only if it breaks below ₹455 decisively. But such a break looks unlikely at the moment. A strong break and a decisive close above ₹500 can boost the momentum for a fresh rally to₹540 or ₹550 . The region between ₹540 and ₹550 is a key long-term resistance for the stock. Since Tata Steel has been on a continuous rise since 2016, the possibility of a corrective fall from around ₹550 cannot be ruled out. Medium-term investors can hold the long positions. Retain the stop-loss at ₹410. Book partial profits on about 30 per cent of your holdings around ₹530.

Published on March 04, 2017
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