ITC's Make-or-Break Zone and What’s Next for Reliance, Kotak Mahindra & SBI

Published 19-01-2025, 10:30 pm

Market Performance Checklist:
Last week was incredible for my YouTube followers, as the trades I shared yielded significant profits. Moreover, I said that I would discuss some of the upcoming earnings while also describing my trade plan. As a result, I covered the earnings and trade plans of HCL Tech (NS:HCLT), Reliance, Axis Bank (NS:AXBK), and Infosys (NS:INFY). So let’s recap briefly:

  • HCL Tech: I stated that the results were average when we took into account the rupee depreciation. Consequently, because of that, I expected the stock to have a big fall and shared my downside target of ₹1,830. The stock reached my target price of ₹1,830 in the next trading session, as it made a low of ₹1,813.
  • Reliance Industries (NS:RELI): A textbook case of “all-in.” This is as across the week, I was stating that I am very bullish on the stock. Hence, I went all in with trades in option sells, option buys, and simple equity. Post results analysis, I gave an upside target of ₹1,320 and was correct. This is as Reliance made a high of ₹1,326 in the next session. Moreover, in the video, I also shared that one of the option buy strikes I held was 1280CE, and in the following trading session I showed how it surged from ₹15.08 to ₹39.7. Thus, delivering stellar returns over a two-day holding period.
  • Axis Bank: I said that the results were apathetic. However, I still expected a fall as the chart pattern was decisively bearish, and my downside targets were ₹985 and ₹970. This view played out perfectly, as on Friday we made a low of ₹974.
  • Infosys: Similar to HCL Tech, I said that the rupee depreciation makes the results subpar. Thus, I expected a drop to ₹1,820. I was correct, as the stock hit my target and made a low at ₹1,812.

This week - ITC (NS:ITC), Reliance, Kotak Mahindra, and SBI (NS:SBI):

Now today the spotlight is on ITC, Reliance, Kotak Mahindra, and SBI. I have covered ITC via the article while covering the other three on my YouTube channel. On the channel, I have shared their detailed chart analysis and trading strategies.

ITC: Navigating a Tightrope:
Since July of last year, ITC has been in a persistent downtrend that has left bullish traders in despair. However, the stock is now at a juncture that will dictate its medium-term trajectory. Here’s what’s on the table:
- Range Expectation: In the coming sessions, I expect ITC to trade in a box range whose support is ₹425 and resistance is ₹446. This setup is a perfect opportunity for positional option sellers, as sideways volatility erodes option premiums quickly.
- Breakout Scenarios: A break above ₹446 could push the stock higher to ₹460 and ₹472, making it appealing to bullish traders. Conversely, a break below ₹425 signals a deeper downtrend, with potential targets of ₹415 and ₹404, likely extending the bearish phase for weeks.

My Trade Plan for ITC:

I won’t touch ITC as an equity buy, as any upmove does not have a favourable risk-reward. This is because any up move will be short-lived. Plus, it will result in a new box range forming, which makes the risk-reward unattractive. Instead, I will stick to options for ITC.

Coming to options, I presently hold CE sells of above ₹446 and PE sells of below ₹425. These trades are currently profitable. I plan to book gains this week, given the proximity to the January series expiry. Thus, I will now only enter fresh options if ITC does the following:
- If ITC breaks below ₹425, I will sell calls (CEs) above ₹440, as that will be the new resistance then. Thus, selling CEs above that should profit from the bearish momentum.
- If ITC breaks above ₹446, I will sell puts (PEs) below ₹430 to capitalise on bullish action.

The Bottom Line:

ITC is at a crossroads. A decisive break below ₹425 could set the stage for a fresh medium-term bearish trend. On the other hand, a break above ₹446 would restore neutrality to the stock and give the bulls a fighting chance. For now, it’s a range trader’s paradise and an options seller’s playground.

Lastly, be sure to check out my YouTube video for a detailed analysis of Reliance Industries, Kotak Mahindra Bank (NS:KTKM), and SBI. These names are brimming with opportunities to boost your trading portfolio this week!

Happy trading.

Youtube video link for Reliance, Kotak and SBI: https://youtu.be/OFe98KX4RNU

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