Technical Analysis

Weekly Trading Guide

Gurumurthy K | Updated on January 10, 2018 Published on September 03, 2017

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itc

infosys

ril

tatasteel

SBI may remain range-bound (₹277.7)

SBI oscillated around the 200-day moving average (₹277) for the third consecutive week. A range-bound move between ₹272 and ₹285 is likely in the near term. A breakout on either side of this range will decide the next move. A break above ₹285 can take the stock higher to ₹290 — a key short-term resistance. Inability to break above this hurdle can pull the stock lower to ₹285 or even ₹280 again. But a strong break above ₹290 will reduce the possibility of further fall in the stock. Such a break will pave way for a fresh rally to ₹305 and ₹310. On the other hand, if SBI declines below the ₹272 level, it can fall to test the crucial support level of ₹268. A decisive weekly close below ₹268 may bring in fresh selling pressure on the stock. In such a scenario, the possibility of the stock tumbling to ₹250 over the medium term will increase. However, the level of ₹250 is a strong support which can halt the fall. An upward reversal from there would be a good opportunity for medium-term investors to re-enter the stock.

ITC is stuck in a narrow range (₹283.6)

ITC was stuck in a narrow ₹279-285 range for the second consecutive week. The 21-day moving average at ₹279 is providing strong support by limiting the downside over the last couple of weeks. As long as ITC sustains above this support, there is a strong likelihood of it breaking above the ₹285-₹287 resistance region. Such a break can take the stock higher to ₹295 in the short term. Further rally, breaking above ₹295, might not be easy for ITC. So a pull-back to ₹287 or ₹285 again after testing ₹295 cannot be ruled out. On the other hand, if the stock breaks below the 21-day moving average support in the coming days, it can fall to ₹273 or ₹270. The region between ₹273 and ₹270 is a key support. A strong break below ₹270 will increase the possibility of the stock falling to ₹265 and ₹260 — a key long-term trend support. Further fall below ₹260 is unlikely. Long-term investors can consider buying the stock on such a fall. Initiate long positions at ₹263 and accumulate at ₹260 if the stock extends its fall.

Infosys lacks momentum (₹920.1)

The strong gap-up open for the week failed to boost the momentum in Infosys. The stock continued to fall all through the week after opening with a gap-up at ₹947, comfortably closing the gap. This indicates that the stock lacks fresh buyers at higher levels. Immediate support is at ₹917. A decisive daily close below this level can increase the downside pressure. The stock can then fall to ₹900. If the stock manages to reverse higher from this psychological support level of ₹900, it can move up to ₹930 and ₹950 levels again. In such a scenario, a range-bound move between ₹900 and ₹950 is possible for some time. But if Infosys declines below ₹900, the selling pressure might increase. The stock can then fall to ₹880 and ₹860 again. Further break below ₹860 can take the stock lower to ₹850 or ₹830. The region between ₹850 and ₹830 is a key long-term support which can halt the current downtrend. Investors can hold the long positions and accumulate on dips at ₹870 and ₹850.

RIL regains strength (₹1,609.3)

RIL that began the week on a negative note, fell initially. However, the stock managed to reverse sharply higher after making a low of ₹1,530 on Tuesday and has closed 2.7 per cent higher for the week. The strong bounce last week has taken the stock well above the 21-day moving average resistance at ₹1,585, which was restricting the upside for more than two weeks. This level will now act as a significant support. Intermediate dips to ₹1,585 may find fresh buying interest in the stock. Next resistance is at ₹1,630, which is likely to be tested. Inability to break above this hurdle can take the stock lower to ₹1,600 or ₹1,585 again. But if RIL manages to surpass the ₹1,630 resistance decisively, it can rally to ₹1,670 or even ₹1,700 thereafter. Short-term traders can buy on dips at ₹1,590. Stop-loss can be placed at ₹1,570 for the target of ₹1,630. Revise the stop-loss higher to ₹1,605 as soon as the stock moves up to ₹1,615. The outlook will turn negative only if RIL declines below ₹1,585. But such a fall looks less probable.

Uptrend is intact in Tata Steel (₹649.9)

Tata Steel continued to rally and close in the green for the fifth consecutive week. The stock was up about 2 per cent last week and has surged 17.8 per cent over the last five weeks. The uptrend is intact. Immediate resistance is at ₹659, which is likely to be tested this week. Inability to break above this resistance can trigger a pull-back move to ₹650 or even ₹640 in the near term. A break below ₹640 will increase the likelihood of the fall extending to ₹630. Further fall below ₹630 may drag the stock lower to ₹600 on the back of profit-booking. But if Tata Steel manages to breach above ₹659 decisively, it can surge further to ₹685 or even ₹700 in the coming weeks. The region around ₹700 is a key resistance, which might halt the rally. A corrective fall targeting ₹650 or ₹630 cannot be ruled out after the stock tests ₹700. Investors hold the long positions. Revise the stop-loss higher to ₹615. Book partial profits at ₹680 and then move the stop-loss for the rest of the holdings to ₹640.

Published on September 03, 2017
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