Weekly trading guide: ITC stays above a crucial base

SBI (₹190.5)

The stock of SBI gained last week and closed at ₹190. But the price remains within the range between ₹173.5 and ₹200. Notably, the stock has been consolidating within these levels for little over a month.

During this course of time, the price has been traversing the 21-day moving average, indicating a lack of trend. Though the price is now above the 21-day moving average, the stock should breach ₹200 to perform considerably. And not everything is bad, as the priceof ₹173.5 — its one-year low — seems to be containing the loss, acting as a good support. Factors favouring the stock are the signs from the indicators.

The relative strength index and the moving average convergence divergence indicators in the daily chart, despite being in the bearish area, are showing an increase in strength of the bulls. Thus, one can be bullish on the stock.

But it is important to break the block at ₹200. So, even though there are tailwinds for an uptrend, traders can buy the stock if it breaks out of ₹200. The stop-loss can be ₹185; the near-term target can be ₹220.

ITC (₹182)

There was no significant action in the ITC stock as it was trading in a tight range throughout last week. ITC was largely fluctuating between ₹178.5 and ₹183. Whatsoever, the price remains above the crucial level of ₹175 and both the 21- and 50-day moving averages.

As a result of the sideways price action, both the moving averages have converged and coincide near ₹179, making it an important price point. The consolidation has also led to indicators becoming flat. The daily relative strength index, though above the mid-point level of 50, remains horizontal.

On the other hand, the moving average convergence divergence indicator is flat, but it stays above the zero level. The stock can be bullish until it remains above ₹175, where the 38.2 per cent Fibonacci retracement of the previous downswing lies. But ₹187 can act as a resistance. Considering these factors, traders can go long on the stock if it rallies past ₹187 and place a stop-loss at ₹175.

The primary target can be ₹200. Beyond that, the stock could rally to ₹207.

Infosys (₹715.5)

The stock of Infosys, which was largely consolidating between ₹655 and ₹680, closed the week on a high after a strong rally on Thursday. The stock has thus posted gains for two consecutive weeks, indicating that a good bullish momentum is being built up, which could take the stock further up.

Also, the price has moved above the important level of ₹700 — the 61.8 per cent Fibonacci retracement level — and above both the 21- and 50-day moving averages, potentially turning the medium-term trend bullish. Moreover, the daily relative strength index remains above the mid-point level of 50 and rises in tandem with price.

The moving average convergence divergence indicator, too, is on a strong upward trajectory and has enteredthe positive region. Considering the aforementioned factors, traders can go long on the stock on declines with stop-loss at ₹650.

The immediate hurdle on the upside is at ₹760, which can be the primary target. Above that, there is a resistance band between ₹790 and ₹800.

RIL (₹1,466)

The stock of Reliance Industries closed with a gain last week, extending the positive streak to six weeks. The 21-day moving average is attempting to cross over the 50-day moving average. These are indications of a strong uptrend.

Substantiating this, the daily relative strength index is on a rise. Notably, the indicator is approaching the over-bought levels. On the other hand, the moving average convergence divergence indicator in the daily chart is osn a strong upward trajectory and remains in the positive region.

However, the stock was unable to crack the resistance at ₹1,500 in the past two weeks, and the candlesticks in the daily chart indicate that the stock might have been facing some downward pressure of late.

So, the stock should break above ₹1,500 in order to re-establish the bull trend. Traders can initiate fresh long positions with a stop-loss at ₹1,400 if it decisively breaks out of ₹1,500.

The nearest hurdle for the stock will be ₹1,540, above which the stock could rally to ₹1,600.

Tata Steel (₹298.3)

The stock of Tata Steel, which was sluggish during the first half of last week, rallied towards the end. Before closing the week at ₹298.4, the stock briefly traded above the crucial level of ₹300, where it registered an intraweek high of ₹304.3.

Nevertheless, the stock remains within the boundaries of the sideways trend, ie, ₹250 and ₹300, which has been in place for over a month. Hence, the stock should breach ₹300 to build a sustainable rally. Corroborating the bullish bias, the daily relative strength index rose along with the stock price and moved above the mid-point level of 50.

The moving average convergence divergence indicator in the daily chart is signalling a considerable bull trend. Though there are signs of a good uptrend, the stock is facing a strong resistance at ₹300. Hence, traders can go long in the stock with a stop-loss at ₹275 if it rallies past the resistance at ₹300.

The primary target can be the resistance at ₹320. Beyond that level, the stock might appreciate to ₹345.