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SBI (₹179.1)
The stock of SBI opened with a gap-up last week at ₹197 versus its previous close of ₹187.8. Unable to hold on to the gain, the stock began to fall. It managed to close above the support of ₹175. The price remains above both the 21- and 50-day moving averages.
However, the major trend is bearish, and the stock has to breach the crucial hurdle at ₹200 to turn the trend bullish. Until then, the intermittent rally should be approached with caution. As the price fell, the daily relative strength index moderated; nevertheless, it lies above the mid-point level of 50.
The moving average convergence divergence indicator in the daily chart, though hovering in the neutral region, is on an upward trajectory. Even though there are a few indications of a bullish bias, the major trend remains negative and the price area between ₹175 and ₹200 is a region of indecision.
So, if the price slips below the support at ₹175 due to the overall downtrend, traders can short the stock with a stop-loss at ₹192. The supports below ₹175 are at ₹165 and ₹150.
ITC (₹193.9)
The stock of ITC, which was trading flat during the first half of the past week, witnessed volatility towards the end of the week. The stock weakened and ended the week with a loss of 3 per cent. It registered an intra-week low of ₹187.8 on Friday, before closing at ₹193.9.
Notably, ₹187 is a considerable support where the 21-day moving average and the 50 per cent Fibonacci retracement level coincide. But there are indications of the bulls being on the back foot over the past week. While the daily relative strength index is showing a fresh downtick, the moving average convergence divergence indicator is turning its trajectory downwards.
Hence, if the stock falls below the support of ₹187, it could face significant downward pressure. On the other hand, ₹200 is a strong resistance and the stock should break out of this level to establish a sustainable rally. So, traders can stay on the sidelines until the stock breaches either ₹187 or ₹200.
The support below ₹187 is at ₹175, whereas the resistance above ₹200 is at ₹208.
Infosys (₹692)
The stock of Infosys dipped last week and slipped below the key level of ₹700. It is an important support as the 21-day moving average coincides at that price point.
But the stock seems to be charting a sideways trend between ₹650 and ₹725 and unless it moves out of the range, the next leg of trend will remain uncertain. As the stock weakened last week, the daily relative strength index declined in tandem, and it now hovers around the neutral region.
The moving average convergence divergence indicator in the daily chart, though in the positive territory, has turned its trajectory downward. Traders can hold back fresh positions until the price remains within the consolidation range between ₹650 and ₹725. If the stock moves past the resistance at ₹725, it could rally to ₹760. A breakout of that level can take the stock to ₹800.
On the other hand, if the stock weakens and breaches the support at ₹650, it is likely to find an immediate support at ₹620 — the 50 per cent Fibonacci retracement level. The subsequent support is at ₹585.
RIL (₹1,588.8)
The stock of Reliance Industries opened the week higher, registering a fresh lifetime high of ₹1,618.4 on Monday. But it was unable to keep the momentum and the stock later declined throughout the week.
On Friday though, the scrip found support at the important level of ₹1,500 and rallied sharply, recouping its intra-week loses and ending the week on a flat note. The 21-day moving average coincides at ₹1,500, making it a significant support. Until the price stays above that level, the outlook can be bullish. But there are signs warranting caution.
The daily relative strength index, though above the mid-point level of 50, did not move higher unlike the stock price. Whereas the moving average convergence divergence indicator has been flat during the past two weeks.
So, despite the uptrend, the stock has to break out of the previous high in order to build bullish momentum. Hence, traders can buy the stock with a stop-loss at ₹1,500 if the stock breaks out of ₹1,620. The potential targets can be ₹1,700 and ₹1,730.
Tata Steel (₹317.6)
Last week, after opening with a gap-up, the stock of Tata Steel fell throughout the week as bulls gave up quickly. But on Friday, it witnessed a sharp reversal on the back of the support band between ₹300 and ₹305 — its 23.6 per cent Fibonacci retracement level of the previous downtrend.
The stock can retain its bullish bias as long as it trades above ₹300. The daily relative strength index was weighed down last week by the depreciating stock price. Though it moved down, the indicator remains above the mid-point level of 50 — a bullish indication.
On the other hand, the moving average convergence divergence indicator in the daily chart, though in the positive region, is showing signs of weakness as the trajectory seems to be shifting downwards. Even so, the likelihood of a rally is high until the stock price is above ₹300; so, traders can buy the stock on declines with a stop-loss at ₹300.
The nearest resistance is at ₹325, above which the stock might appreciate towards the resistance at ₹345.
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