High Five Stocks

SBI (₹168.2)

SBI surged 3 per cent on Friday, which has helped it trim its weekly loss to 6.5 per cent. Both the medium and short-term trend is down for the stock. Over the past four weeks, there has been an increase in volume. The stock now tests and hovers above a key long-term support band between ₹150 and ₹160, from which it had reversed higher previously. The daily relative strength index and price rate of change displaying positive divergence imply that trend reversal is on the cards. Further, the weekly RSI features in the deep oversold territory, signalling a bounce back in the price. The company will announce its Q3 results on February 11, which traders can watch out for. Any further declines in the coming week can find support in the range between ₹150 and ₹160. Traders should tread with caution and consider buying on a reversal from this band. Key resistances are at ₹174, ₹185 and ₹200. Supports below ₹150 are at ₹140 and ₹130.

ITC (₹323.9)

After forming a bullish engulfing candlestick pattern in the weekly chart, the stock of ITC extended its gains and rallied 1.4 per cent last week. This upward reversal is backed by a positive divergence in the daily price rate of change and moving average convergence divergence indicators. However, the stock now tests a key resistance at around ₹325, where its 50 and 200-day moving averages are poised. The indicators in the daily chart are on the brink of entering the positive territory. Significant and trend deciding level is pegged at ₹331. Only an emphatic break above this resistance will strengthen the stock’s on going up move and take it northwards to ₹340 and then to ₹350 levels in the short term. Traders with a short-term view can buy above ₹331 levels with a fixed stop-loss. Failure to move past ₹331 will keep the stock moving sideways in the wide range between ₹305 and ₹330. Immediate supports are placed at ₹317, ₹310 and ₹305.

Infosys (₹1,174.9)

Though the stock has managed to marginally close above the key resistance band between ₹1,160 and ₹1,170, formation of a spinning top candlestick pattern in the weekly chart is a cause for worry. Further, the daily price rate of change and relative strength index are showing negative divergence, signalling that trend reversal is in the offing. Inability to extend the rally can drag the stock down to ₹1,150 and ₹1,130. A strong fall below the second support level of ₹1,130 will signify change of trend and drag the stock further down to the ₹1,100-₹1,110 zone. Medium as well as short-term trends are up for the stock. It trades well above its 50 and 200-day moving averages. The short-term uptrend will remain in place as long as the stock trades above the support band of ₹1,100-₹1,110. Continuation of the on going uptrend can encounter resistances at ₹1,200 or ₹1,220. Investors can consider taking profits off the table at this juncture and stay on the sidelines.

RIL (₹972.3)

After registering a 52-week high at ₹1,089 on January 15, the stock of Reliance Industries changed direction and started to decline. With this, the stock’s short-term uptrend has come to an end. While trending down, the stock has decisively breached its 50-day moving average as well as an important support at ₹990 by tumbling 6.8 per cent last week. It trades well below its 21 and 50-day moving averages. Moreover, the stock has breached medium-term up trend-line. Further slump below the base zone between ₹940 and ₹950 will alter the stock’s medium-term uptrend and drag it down to ₹920 or even to ₹900. Investors with a medium-term view should consider taking profits off the table at this juncture and re-entering at lower levels. Traders with a short-term perspective can make use of rallies to initiate fresh short position while maintaining a stop-loss at ₹990 levels. Key resistances above ₹990 are placed at ₹1,115 and ₹1,130.

Tata Steel (₹234)

On Friday, the stock of Tata Steel advanced 3.5 per cent with extraordinary volumes, bouncing from a key support at ₹225. There is an increase in daily volume over the past four trading sessions. The indicators in the daily chart have started moving upwards. Although the stock has plunged 6.4 per cent last week, it is experiencing buying interest at lower levels. From around ₹225, the stock reversed higher last November and December. So, traders with a high-risk appetite can consider buying the stock at the current levels while maintaining a stop-loss at ₹225. Targets are ₹240 and ₹250. Next resistances above ₹250 are at ₹260 and ₹275. To reinforce the bullish momentum, the stock needs to move above ₹260. On the other hand, a fall below ₹225 will negate this positive view and pull the stock down to ₹210 or ₹200. The stock continues to consolidate sideways in the wide band between ₹200 and ₹260 since last August.

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