High FIve

SBI faces short-term resistance

SBI staged a smart recovery in the last two trading sessions from the low of ₹252.4 to close 2.6 per cent higher last week. The immediate outlook is not clear as there is an immediate resistance at ₹275. Whether the stock breaks this resistance or not will decide the next move. A decisive break above ₹275 will increase the bullish momentum and take the stock higher to ₹280 and ₹284 this week. Traders can wait for such a break and go long at ₹277. A stop-loss can be kept at ₹273 for the target of ₹283. On the contrary, if the stock reverses lower from ₹275, it can fall back to the levels of ₹260 and ₹265. The level of ₹284 is a key medium-term trend-line resistance. A strong break and decisive weekly close above ₹284 will signal the reversal of the downtrend that has been in place since the last week of January.

ITC signals a trend reversal

ITC reversed sharply higher after recording a low of ₹300.6 and closed 3.8 per cent higher last week. It has breached and closed decisively above the 100-day moving average of ₹323. Immediate resistance is at ₹328, which is likely to be broken, and the stock can extend its upmove to ₹335 and ₹338 this week. Further break above ₹338 will open the doors for the next target of ₹345 — the 200-day moving average resistance. Supports are at ₹323, ₹318 and ₹315. Short-term traders can go long with a stop-loss at ₹321 for the target of ₹337. The 200-week moving average at ₹304.2 has halted the downtrend that has been in place since February. A strong weekly close above ₹345 will confirm this reversal. The stock will come under pressure once again only if it declines below ₹300.

Immediate outlook for Infosys is unclear

Infosys was range-bound between ₹1,055 and ₹1,092 last week. The stock has closed on a mixed note and the immediate outlook is not clear. Traders can stay out of the market until a clear trade signal emerges. A strong break above ₹1,092 can take the stock higher to ₹1,110 and ₹1,120 this week. It will also increase the chances of breaching the next resistance at ₹1,130 and a rise thereafter to ₹1,150 levels. On the other hand, if the stock breaks the range below ₹1,055, it can fall to ₹1,040 — the 200-day moving average support or even ₹1,030. The ₹1,030-1,040 zone is a strong support and is likely to limit the downside for the stock. There is a strong likelihood of the stock breaking above the previous high of ₹1,166 and a rally to fresh highs as long as it trades above this ₹1,030-1,040 support zone.

RIL can see a corrective fall

RIL doesn’t seem to be getting strong follow-through buying to extend its rally above the psychological ₹1,000 level. The stock fell over 2 per cent in the past week . Support is at ₹990. A strong break below this will increase the downside pressure and turn the short-term outlook bearish. Such a break will also increase the chances of seeing a corrective fall to ₹960 and ₹950. Short-term traders can initiate short position if the stock declines below ₹990. Stop-loss can be placed at ₹1,005 for the target of ₹965. However, the medium-term outlook is bullish with an inverted head and shoulder pattern on the charts. Strong support is in the ₹940-950 zone . The stock is more likely to reverse higher again after the short-term corrective fall. Such a reversal will have the potential to take the stock higher to ₹1,100 .

Downtrend is intact for Tata Steel

Tata Steel tumbled 6.7 per cent last week. The overall downtrend remains intact and the stock is likely to extend its fall in the coming week as well. Immediate resistance is at ₹255 and strong resistance is around ₹270. A fall to ₹240 is possible in the initial part of the week. A break below this level will see the stock tanking to ₹225 and ₹220 thereafter. Traders can go short and also make use of any intermediate rallies to accumulate short positions. Stop-loss can be kept at ₹260 for the target of ₹225. This stock will need a close watch in the coming weeks as an important long-term support is coming up at ₹215. This support might halt the downtrend that has been in place since July 2014. A reversal from here can trigger a corrective rally towards ₹250 and ₹270.

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