Technical Analysis

Weekly Trading Guide

Gurumurthy K | Updated on January 10, 2018 Published on September 24, 2017

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RIL hovers above key near-term support

RIL reversed sharply lower after a high of ₹872.1 last week. The stock has closed three per cent lower and has snapped three weeks of consecutive rally. Immediate support is in the ₹810-₹805 region. If the stock manages to bounce from this support, a rise to ₹832 is possible. Further break above ₹832 will increase the possibility of the stock revisiting ₹870 levels. But, if RIL breaks below ₹805 decisively in the coming days, it can come under pressure and fall on the back of profit-booking to ₹770 — a key short-term trend support. A bounce from this support may ease the downside pressure and take the stock higher to ₹800 or ₹820. But a strong break below ₹770 will see the downmove extending to ₹745 or ₹735. The level of ₹735 is a key long-term trend support, which is likely to halt the fall. The stock is more likely to reverse higher from this support as fresh buying interest may emerge at this level. Investors with a long-term perspective can consider buying the stock in the ₹750-₹735 region.



Short-term outlook is bearish for SBI

SBI fell as expected breaking below the key support level of ₹268 last week. The stock was down 3.7 per cent and the outlook is bearish. Resistance at ₹267 is likely to cap the upside in the near-term and a fall to ₹251 is likely in the short-term. A break below ₹251 can take the stock further lower to ₹246 or ₹244. Traders can hold the short position and revise the stop-loss lower to ₹267 for the target of ₹255. The current downmove is likely to halt in the ₹246-₹244 support zone and a relief rally to ₹260 or ₹265 is possible thereafter. Short-term traders with high risk appetite can initiate fresh long positions if the stock reverses higher from the ₹246-₹244 support zone. Stop-loss can be placed at ₹238 for the target of ₹265. The price action around ₹246-₹244 will need a close watch. A strong break and a decisive weekly close below ₹244 would be bearish from a long-term perspective. Such a break will increase the likelihood of the stock tumbling to ₹200 or ₹190 over the long-term.

Infosys reverses lower from a key resistance

Infosys reversed sharply lower after testing the key resistance level of ₹918 last week. Immediate resistance is at ₹905. Inability to break above this hurdle can drag the stock lower to ₹883 in the coming days. If the stock manages to bounce from ₹883, it can move back to ₹900 and ₹918. In such a scenario, a range bound move between ₹883 and ₹918 is possible. A breakout on either side of ₹883 or ₹918 will then determine the next move. A strong break above ₹918 will ease the downside pressure and such a break can then take the stock higher to ₹950. On the other hand, if Infosys sustains below ₹918 and declines below ₹883 in the coming days, it can then fall to ₹866. Further break below ₹866 will increase the likelihood of the fall extending to ₹840 or ₹830. The region between ₹840 and ₹830 is a key long-term trend support zone, which is likely to halt the downtrend that has been in place since June 2016. Investors can hold the long positions and accumulate on dips near ₹840.

ITC likely to test its crucial supports

ITC fell to a low of ₹264.15 initially last week but managed to bounce back and stayed in a narrow range. The near-term view is unclear; however, as long as the stock trades below ₹270, the possibility of it falling to ₹262 or ₹260 is high. The region between ₹262 and ₹260 and then the 21-month moving average support at ₹255 are the crucial supports to watch. The downtrend that has been in place since the July peak of ₹353 is likely to halt between ₹262 and ₹255. A strong upward reversal thereafter can take ITC higher to ₹268 or ₹270. Further break above ₹270 will increase the likelihood of the rally extending to ₹280 thereafter. Medium-term traders with high risk appetite can make use of dips to initiate fresh long positions at ₹262. Accumulate on dips at ₹258 and ₹256. Stop-loss can be placed at ₹248 for the target of ₹280. On the other hand, if ITC declines and closes decisively below ₹255, it will increase the possibility of the stock tumbling to ₹240 or ₹230 levels thereafter over the medium-term.

Tata Steel is set for a corrective fall

After surging for seven consecutive weeks, Tata Steel fell last week. The stock made an intra-week high of ₹696.55 and reversed sharply lower to close the week decreasing by 3.6 per cent. Charts indicate that the stock is all set for a corrective fall. Cluster of resistances are in between ₹660 and ₹670. If the stock manages to bounce from current levels and breaks above ₹670, the downside pressure may ease. A rise to test ₹700 levels is possible then. In such a scenario, a range bound move between ₹650 and ₹700 can be seen for some time. But on the charts, the bias is negative and the possibility for the stock breaking above ₹670 in the coming days is less. As such, while the stock remains below ₹670, a fall to ₹640 or ₹635 cannot be ruled out in the short-term. Further break below ₹635 will increase the likelihood of the fall extending to ₹610 over the medium-term. Investors holding long positions can exit and take profit at current levels

Published on September 24, 2017
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