Technical Analysis

Weekly Trading Guide

Gurumurthy K | Updated on January 09, 2018






Near-term view is positive for SBI (₹280.4)

SBI continues to oscillate around the 200-day moving average (₹277) for the second consecutive week. The long wick on last week’s candle, indicating fresh buyers at lower levels, leaves the immediate outlook positive. An up-move to ₹288, ₹290 or even ₹293 is likely. Cluster of resistances are poised between ₹288 and ₹293. A decisive close above ₹293 is needed to confirm that the corrective fall has ended. Such a break will pave way for a rally to ₹306 thereafter. Having said that, inability to breach the ₹288-293 resistance cluster can push the stock lower to ₹285 or ₹280. The 55-week moving average at ₹272 is a key near-term support. A strong break below it can take SBI lower to ₹268 — the next crucial trend deciding support. If SBI declines and closes decisively below ₹268 on a weekly basis, the downside pressure may increase and the corrective fall can extend to ₹250 ore even lower. However, such a fall to ₹250 will be a good opportunity for medium-term investors to re-enter the stock.

Resistances cap the upside in ITC (₹281.5)

ITC was stuck in a narrow range last week. The levels of ₹285 and ₹287 are significant resistances. A strong break above ₹287 is needed for the stock to gain fresh momentum. Such a break can take ITC higher to ₹295 in the short term. But the price action on the daily charts signals that the stock lacks fresh buyers and leaves the immediate outlook negative. This reduces the possibility of the stock breaking above the ₹285-287 resistances in the coming days. Immediate support is at ₹280. A break below it can take the stock lower to ₹271. Traders with high risk appetite can go short on a break below ₹280 at ₹279. Keep the stop-loss at ₹283 for the target of ₹272. Revise the stop-loss lower to ₹278 as soon as the stock moves down to ₹276. The level of ₹271 is a key short-term support. A strong break below this support can take the stock lower to the level of ₹260 — a key trend support which can halt the fall. Long-term investors can buy on dips at ₹262 and accumulate at ₹260 and ₹258.

Key resistance ahead for Infosys (₹912.5)

Infosys clawed back from the low of ₹861.5 in the past week. The news on Nandan Nilekani returning to the company’s board triggered this sharp short-covering rally in the stock last week. Will this bounce-back move sustain? We will have to wait and see. Immediate resistance is at ₹917. A break above it can ease the downside pressure and take the stock higher to ₹935 initially. Further break above ₹935 will pave way for the next target of ₹950. Such a rally will also reduce possibility of the stock declining below ₹900 again. It will then increase the likelihood of it testing ₹1,000 levels again. But if Infosys fails to break above ₹917 and reverses lower, it can decline below ₹900 again and revisit ₹860 levels. Further break below ₹860 can take it lower to ₹850 or ₹840. As mentioned earlier, the region between ₹850 and ₹840 is a key long-term support that is likely to halt the downtrend. Investors can hold the long positions and accumulate on dips at ₹865 and ₹850 levels.

RIL is stuck in a narrow range (₹1,567.4)

RIL remained in its consolidative mode for the second consecutive week. The 21-day moving average (₹1,593) continues to cap the upside in the stock. If RIL manages to break above the 21-day moving average, it can move up to ₹1,625. On the other hand, if the stock fails to break above the 21-day moving average resistance and declines below ₹1,550, it can come under pressure. Increased selling on the back of fresh profit-taking can take the stock lower to ₹1,540. A break below ₹1,540 will increase the likelihood of the stock extending its fall to ₹1,520 or even ₹1,500 in the short term. An bounce-back move from ₹1,500 can keep the stock range-bound between ₹1,500 and ₹1,550 . But if RIL declines below ₹1,500, it can extend its corrective fall to ₹1,450 and ₹1,440. The region between ₹1,450 and ₹1,440 is a key support which is likely to halt the corrective fall. A strong bounce from this support zone will keep the overall uptrend intact. Long-term investors can consider re-entering the stock around ₹1,450.

Tata Steel retains its momentum (₹638.9)

Tata Steel retains its momentum. The stock rose 2.2 per cent last week and has been moving up over the last four consecutive weeks. Immediate support is at ₹630. As long as the stock stays above it, a rally to test the next resistance at ₹647 or ₹650 is likely. Inability to break above ₹650 can trigger a pull-back move to ₹635 or ₹630. But a strong break above ₹650 will pave way for the next targets of ₹680 and ₹700. Investors can hold the long positions. Revise the stop-loss higher to ₹595. Book partial profits at ₹680 and then move the stop-loss for the rest of the holdings to ₹620. The near-term view will turn negative if Tata Steel declines below ₹630. Such a break can take the stock lower to ₹615 or ₹610. The 21-day moving average at ₹598, which has been limiting the downside since May, is a key support to watch. The stock will come under fresh selling pressure only if it declines below this support. However, such a strong fall looks less probable at the moment.

Published on August 27, 2017

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

This article is closed for comments.
Please Email the Editor