Weekly Trading Guide: SBI, ITC, Infosys, Tata Steel, RIL

ITC seeks for a direction

ITC is stuck in a narrow range for the third consecutive week. The support at ₹260 and resistance at ₹267 are key levels to watch in the coming days. A breakout on either side of these two levels will decide the next leg of move for the stock and give a cue on the upcoming trend. If the stock sustains above ₹260 and breaks above ₹267 decisively, the downside pressure will ease. Such a break can take it higher to ₹272 and will also give an early indication that the downtrend that has been in place since July 2017 could be ending. A decisive break and close above ₹272 will confirm the trend reversal and can target ₹277 and ₹280 thereafter. But if ITC declines below ₹260, it can dip to test the significant support level of ₹257. A further fall below ₹257 will then increase the possibility of the stock extending its down-move towards ₹252. Traders can hold the long positions and accumulate on dips at ₹257. Retain the stop-loss at ₹254 for the target of ₹275. Revise the stop-loss higher to ₹265 as soon as the stock moves up to ₹270.

Infosys can dip ahead of results

After a strong rally for four consecutive weeks, Infosys fell sharply last week by 2.6 per cent. Support is at ₹1,010. A break below it will increase the likelihood of the stock extending its current down-move to ₹980 or ₹975 this week, well ahead of the third quarter results announcement on Friday. The outcome of the quarterly results will then determine the next trend for the stock. If Infosys manages to bounce from ₹980-₹975, an upmove to ₹1,010 will be possible. But a fall below ₹975 can drag the stock further lower to ₹950 levels. On the other hand, if the stock sustains above ₹1,010 this week, a bounce to ₹1,035 and ₹1,045 is possible again. In such a scenario, a range-bound move between ₹1,010 and ₹1,045 can be seen for some time. A strong break and a decisive weekly close above ₹1,045 is now needed for the stock to gain fresh momentum and rally further. The next target above ₹1,045 is ₹1,070. Investors can hold the long positions and can accumulate if the stock falls towards ₹980 in the coming days.

RIL is stuck in a narrow range

RIL has been stuck in a narrow range over the last couple of weeks. The immediate outlook is unclear. Support is at ₹908 and resistance is at ₹937. A breakout on either side of ₹908 or ₹937 will determine the next trend. Until then the stock can continue to trade sideways between ₹908 and ₹937. A strong break above ₹937 can ease the downside pressure. Such a break can take the stock higher to the crucial resistance level of ₹960. A strong break above ₹960 can boost the momentum and take the stock further higher to ₹1,000 levels thereafter. On the other hand, if RIL declines below ₹937 in the coming days, a fall to ₹895 or ₹890 is possible. A break below ₹890 will then increase the likelihood of the stock extending its down-move to ₹880 or ₹875. As being reiterated over the last few weeks, the region between ₹880 and ₹875 is a crucial support zone. A decisive break below ₹875 will increase the possibility of a double-top reversal pattern on the chart. In such a scenario, the possibility of the stock falling to ₹854 will increase.

Short-term view is bearish for SBI

SBI fell last week as expected to touch a low of ₹301.65. Though it managed to reverse higher from the week’s low, the bounce-back move lacks strength. The stock made a high of ₹311.8 on Friday and came off from there to close 1 per cent lower. The short-term outlook remains bearish. A cluster of resistances in the broad ₹310-₹320 region can cap the upside in the short term. An intermediate bounce to this resistance zone if seen can see fresh sellers coming into the market. A fall to ₹294 or ₹292 is likely in the coming days. A strong break below ₹292 will increase the likelihood of the stock extending its fall to ₹285. Traders who have taken short positions last week can hold them. Add more short positions at ₹314 if an intermediate bounce breaking above ₹310 is seen in the near term. Retain the stop-loss at ₹317 for the target of ₹294. Revise the stop-loss lower to ₹305 as soon as the stock moves down to ₹299. The outlook will turn positive only on a strong break above ₹320. But such a strong move looks less probable.

Uptrend is intact in Tata Steel

Tata Steel rose for the third consecutive week and was up over 5 per cent last week. The strong surge rally last week strengthens the overall uptrend. Support at ₹735 can limit the downside in the near term. Dips to this support may find fresh buyers coming into the market. The downside could be limited to the next significant support levels of ₹715 and ₹690 even if the stock declines, breaking below ₹735. But such a fall looks less likely. As such, the possibility of the stock sustaining above ₹735 is high . A rally to ₹800 is likely. A strong break above ₹800 will increase the likelihood of the up-move extending to ₹825 and ₹850 levels. An intermediate pull-back move from ₹850 levels to ₹800 or ₹750 cannot be ruled out. But the overall uptrend will continue to remain intact. Tata Steel is now all set to revisit ₹930 and ₹950 levels from a medium to long-term perspective. Investors can hold the long positions. Revise the stop-loss higher to ₹640. Consider booking partial profits around ₹900 levels.

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