Weekly Trading Guide

Short-term outlook turns bearish for SBI (₹312.5)

SBI tumbled about 6 per cent last week, breaking below the key support level of ₹325. The sharp fall over the last two weeks has turned the short-term outlook bearish for SBI. Immediate resistance is between ₹314 and ₹316. Inability to bounce above ₹316 from the current levels will increase the likelihood of the stock breaking below the support at ₹309. Such a break will intensify the selling pressure on the back of profit-booking and take it lower to ₹297. Further break below ₹297 can drag the stock to ₹290. But, if the stock sustains above ₹309 and breaks above ₹316, the downside pressure can ease. In that case, a relief rally to ₹325 or ₹328 is possible. Strong resistance is in the ₹325-₹328 region, which is likely to cap the upside in the short term as fresh sellers may emerge at higher levels. Traders with high-risk appetite can go short on rallies at ₹315 and at ₹325. Stop-loss can be placed ₹335 for the target of ₹292. Revise the stop-loss lower to ₹305 as soon as the stock moves down to ₹299.

ITC likely to extend its fall ITC (₹255.3)

ITC reversed lower last week failing to sustain the bounce-back move seen last week. The 21-day moving average resistance at ₹259 has restricted the upside in the stock all through the week. The stock made a high of ₹260.7 and has reversed lower from there to close about 2 per cent lower for the week. The pull-back move last week increases the possibility of the stock breaking below the immediate support level of ₹253.5 (100-week moving average) in the coming days. Such a break can take the stock lower to ₹249. A break below ₹249 will then increase the likelihood of the stock extending its fall to ₹245 — the 61.8 per cent Fibonacci retracement support level. But, if it manages to bounce from ₹253.5, it can go up further to ₹259. The downside pressure will ease only if ITC breaks above ₹259. The next target is ₹262. But a break above ₹259 is less likely. Traders can go short on rallies at ₹258. Stop-loss can be placed at ₹261 for the target of ₹250. Revise the stop-loss lower to ₹256 as soon as the stock moves down to ₹254.

Infosys (₹958.5) Near-term outlook is negative for Infosys

Infosys failed to sustain above the psychological ₹1,000 mark and tumbled 5 per cent last week. The downward reversal in the past week indicates the absence of fresh buyers to take the stock strongly above ₹1,000. It has also turned the near-term outlook negative for the stock. Key resistance in the ₹975-980 zone can cap the upside in the near term. The possibility of the stock falling to ₹943 in the coming days is high. Further break below ₹943 will increase the likelihood of the fall extending to ₹933, ₹929 or even ₹923. Cluster of supports is poised in the broad ₹933-₹923 region. This leaves the possibility of the stock falling further below ₹923. An eventual upward reversal from the ₹933-₹923 support region can take Infosys higher to ₹960 and ₹970 level again. Short-term traders can buy on dips at ₹930. Stop-loss can be placed at ₹905 for the target of ₹980. Revise the stop-loss higher to ₹940 as soon as the stock moves up to ₹950. Long-term investors can hold the stock and accumulate if it falls to ₹920.

RIL (₹909.8) RIL is likely to fall and test key support

RIL snapped its two-week rally and tumbled 4.2 per cent last week. Immediate support is at ₹905. If the stock manages to reverse higher from this support, a bounce to ₹930 or ₹935 is possible. Further break above ₹935 can take the stock higher to ₹959 again. In such a scenario, a range-bound move between ₹905 and ₹960 can be seen for some time. However, the bias is negative on the chart, indicating lower possibility of RIL reversing higher from ₹905. As such, a break below ₹905 can drag the stock lower to ₹885 or ₹880 in the coming days. This fall will form a double-top reversal pattern on the charts. So, the price action around ₹880 will need a close watch. If RIL manages to bounce from ₹880, the downside pressure can ease. A rally to ₹920 and 950 levels can be seen again. But if the stock breaks below ₹880 decisively, it will confirm the reversal pattern. In such a scenario, the stock can fall to ₹845. Further break below ₹845 will increase the likelihood of the downmove extending to ₹830 or even ₹800.

Tata Steel (₹680.7) Tata Steel may dip initially

After hovering around ₹700 for three weeks, Tata Steel fell sharply in the past week. The stock was down 3.8 per cent for the week. Immediate support is at ₹676. A break below it can take the stock lower to ₹668. The level of ₹668 is a key short-term support. If the stock manages to reverse higher from there, a rally to ₹700 or even ₹715 is possible. A strong break and a decisive close above ₹715 is needed for the stock to gain fresh momentum. Such a break can take the stock further higher to ₹730 and ₹740 levels again. On the other hand, if Tata Steel beaks below ₹668 decisively, it can come under fresh selling pressure. Such a break will increase the likelihood of the stock falling to test the 100-day moving average support at ₹653. The region around ₹650 is a crucial support for the stock. Whether the stock manages to bounce higher from there or not will determine the next trend. At the moment, a strong break below ₹650 looks less probable.

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