Upmove in SBI gains momentum

SBI (₹266.5)

The upmove in the SBI stock is gaining momentum. The stock surged over 6 per cent last week and closed within the ₹265-₹270 resistance zone. The broader view remains bullish as the stock continues to find strong support around ₹240. The stock will come under renewed pressure only if it declines below ₹240 decisively. However, the price action on the daily chart suggests that there is a strong likelihood of the stock breaching above ₹270 in the coming days. Such a break can take it higher to ₹288 which is the next key resistance. The Budget may decide whether SBI can break above ₹288 or not. Inability to break above ₹288 can trigger a pull-back move to ₹260. But a strong break and a weekly close above ₹288 may boost the bullish momentum. The path will thus become clear for SBI to target ₹327 thereafter. Medium-term investors can hold the long positions. Retain the stop-loss at ₹220 and revise it higher to ₹230 as soon as the stock moves up to ₹295.

ITC may witness a corrective fall

ITC (₹257.5)

ITC extended its rally through most of last week. But the resistance around ₹265 held well. The sharp 2.8 per cent fall on Friday wiped out almost all the gains made during the week. Since the stock has been rallying continuously over the last five consecutive weeks, it can now see a corrective fall. Immediate support is at ₹256. A break below it can drag the stock lower to ₹249. The level of ₹249 is a strong support, as both trendline as well as the 38.2 per cent Fibonacci retracement supports are poised at this level. So a break below ₹249 looks less probable at the moment. A sharp reversal from ₹249 may take ITC higher again to ₹265-₹267 in the coming weeks. In such a scenario, a range-bound move between ₹249 and ₹267 can be seen for some time. A strong break and a decisive weekly close above ₹267 may boost the bullish momentum and pave way for the next targets of ₹275 and ₹285. On the other hand, if ITC declines below ₹249, it can fall to ₹242 or ₹240 in the short term.

Immediate outlook is unclear for Infosys

Infosys (₹942.5)

Infosys fell over 2 per cent intraweek, but recovered sharply from the low of ₹926.4. Though the stock continues to extend its downtrend, the pace of fall is slow. This leaves the immediate outlook unclear for Infosys. However, the broader picture is still negative. The 200-week moving average at ₹963 is a key resistance to watch for. The downside pressure will ease only if the stock breaches this hurdle decisively. Such a break can pave way for a relief rally to ₹1,000 or ₹1,020. But as long as the stock remains below ₹963, the possibility of it declining to test the crucial ₹913-₹890 support zone cannot be ruled out. The presence of the 50 per cent Fibonacci retracement support, psychological ₹900 level and a trendline at ₹890 makes the ₹913-₹890 a strong support zone. A strong break below ₹890 may trigger fresh selling interest in the stock and drag it to ₹825 or ₹800. But a reversal from ₹900 will ease the downside pressure and keep Infosys range-bound between ₹900 and ₹1,020 for some time.

RIL hovers around a crucial support

RIL (₹1025.1)

RIL hovered around the 200-day moving average and was stuck in a narrow range. The weekly candle suggests indecisiveness in the market. The 55-week moving average at ₹1,017 and the 55-day moving average at ₹1,035 are the key supports to watch. A breakout on either side of ₹1,017 or ₹1,035 will decide the next move. A strong break below ₹1,017 may bring back pressure in the stock. This will increase the likelihood of the stock breaking below ₹1,000 going forward. The next targets below ₹1,000 are ₹985 and ₹975. A strong break below ₹975 may drag RIL lower to ₹950 or ₹940. The presence of the 200-week moving average around ₹940 makes it a strong support. But if RIL manages to sustain above ₹1,017 in the coming days and breaches above ₹1,035, it may rally to ₹1,045 or ₹1,050 thereafter. However, the downside pressure in the stock will ease only if it breaks above ₹1,050 decisively. Such a break may increase the possibility of it revisiting ₹1,100 levels thereafter.

Tata Steel likely to test a key resistance

Tata Steel (₹469.2)

Tata Steel surged for the fourth consecutive week. The stock was up over 3 per cent. The uptrend in the stock remains intact. A key trendline resistance is around ₹480 which can be tested this week. The outcome of the Budget may decide whether Tata Steel will extend its uptrend breaking above ₹480 or reverse lower. A strong reversal from ₹480 may trigger a corrective fall to ₹450 or ₹440. The region between ₹440 and ₹430 is a strong support zone which is likely to limit the downside in the short term. A strong break above ₹480 may take the stock higher to ₹500 initially. Further break above ₹500 will see Tata Steel surging to ₹540 or ₹550 thereafter. Medium-term investors can hold the longs and revise the stop-loss higher to ₹375. Move the stop-loss further higher to ₹390 as soon as the stock moves up to ₹480. As mentioned last week, investors with less risk appetite may consider booking partial profits around ₹450 if the stock reverses lower from ₹480.Gurumurthy K

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