Technical Analysis

SBI, ITC, Reliance, Infosys, Tata Steel

Yoganand D | Updated on January 23, 2018 Published on April 26, 2015






SBI (₹275)

Last week, the stock tested the key resistance at around ₹295, which is the 50 per cent Fibonacci retracement level of the prior down-leg. It failed to breakthrough this level; instead, the stock tumbled 5.5 per cent, resuming the short-term downtrend. It closed slightly below its 200-day moving average. The indicators on the daily chart have entered the bearish zone, whereas those in the weekly chart are losing momentum and charting a path downwards. As long as the stock trades below the significant resistance band between ₹290 and ₹295, the short-term outlook will remain bearish. Traders with a short-term view can make use of rallies to initiate short position with a stop-loss at ₹290. Continuation of the downtrend can pull the stock down to ₹260 and ₹255. As long as the stock trades above the key base level of ₹235, medium-term investors can remain invested with a stop-loss at ₹230.

ITC (₹347.1)

The stock of ITC was choppy and fell 1.3 per cent last week, witnessing a corrective decline. It has a key resistance band between ₹350 and ₹355. Further, both the 50 and 200-day moving averages are also poised around this band and act as barriers. Subsequent key resistance is very near that level, at ₹362. A conclusive break-out from this resistance will have bullish implications and take the stock northwards to ₹370 and then to ₹380 in the short to medium-term. Investors with a medium-term perspective can consider initiating fresh long position on a break above ₹362 levels. However, inability to do so can keep the stock moving sideways in the range between ₹340 and ₹362 for a while. On the downside, a strong fall below ₹340 can drag the stock down to ₹330 and ₹320 levels. Therefore, we reiterate that traders with a short-term perspective should tread with caution.

Infosys (₹1996.2)

Infosys plunged 8.5 per cent in the previous week, post its disappointing fourth quarter results on Friday. With this steep fall, the medium-term uptrend is under threat; hence investors can consider taking profits at this juncture. A decisive fall below the medium-term significant support level of ₹1,900 will mar the uptrend and pull the sock down to ₹1,800 or ₹1,700 levels. Conversely, to strengthen the medium-term uptrend, the stock needs to rally beyond ₹2,150 levels for an up move to ₹2,250 or ₹2,350 levels in the medium term. The stock is in a short-term downtrend that got intensified last week. It now tests a key support around ₹2,000 where its 200-day moving average is poised. Traders can make use of rallies to initiate short position with a stop-loss at ₹2,075. Resumption of the downtrend can pull the stock down to the levels of ₹1,900 and then to ₹1,800.

RIL (₹879.4)

Last week, the stock of Reliance Industries plummeted 5 per cent after testing the key resistance in the band between ₹930 and ₹940. The 200-day moving average, hovering around this band, also acted as a key resistance level. The indicators and oscillators in the daily chart have reversed downwards. However, the stock’s key support at ₹870 and 21 as well as 50-day moving average around this level can cushion the stock. Only a conclusive fall below the level of ₹870 will be a cue for the trader to initiate fresh short position with a fixed stop-loss. Such a break can pull the stock down to ₹850 and then to ₹840 in the short term. Further slippage can retract the entire up move and the stock can fall to ₹820 or even to ₹800 in the medium term. Nevertheless, an upward reversal can take the stock higher once again to ₹900 and then to the levels of ₹930 and ₹940 in the same period.

Tata Steel (₹370.1)

The stock of Tata Steel surged 7 per cent, in line with our expectations last week. Now, the short-term trend is up for the stock. It hovers well above its 21 and 50-day moving averages. Moreover, there is an increase in volume over the past seven trading sessions. The indicators and oscillators on the daily chart feature in the bullish zone, backing the up move. Those indicators on the weekly chart have entered the neutral region from the bearish zone. Having said that, the stock faces a key resistance ahead at ₹380 level. Traders can consider holding their long position and booking some profits around this resistance. An emphatic break of ₹380 can take the stock northwards to ₹390 and ₹400 levels. Next important resistance is placed at ₹420. But, inability to exceed ₹380 can pull it down to ₹360 or ₹350 levels. Subsequent supports are at ₹337 and ₹326.

Published on April 26, 2015
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