Web Exclusive: How to trade IT stocks ahead of the results season
The June quarter results season begins this week with IT heavyweights TCS and Infosys announcing their results on July 12. Check out the trading strategies for CNX IT, BSE IT indices and key stocks from this space.
Last close: 5327
Nifty opened with negative bias on the back of weak cues from global markets. The downtrend persisted throughout the session, ended flat with marginal loss after an attempt to recover in the late noon session on Friday. Investors are eagerly waiting for first quarterly result for FY 2012-13 of major companies like HDFC, HDFCBANK, INFY and TCS which will be announced this week.
Technically, Nifty consolidated in a narrow range of 5275-5340 showed a small move in the last traded week gives an indication that probably the markets are waiting for a big upside move of 100-150 points immediately. Once again, MACD is also on recovery path. Therefore, “Short term view remains bullish". Nifty is likely to face resistance around 5400-5445, on the downside can support 5250-5200 for this week.
Last close: 6027
CNXIT was trading firmly while maintain the level of 6500-6600 till March 2012 before the announcement of fourth quarter earnings for IT stocks. Disappointment from earnings of IT companies dragged down the index from 6500 to 5800 in early April, 2012. Thereafter, CNXIT is consolidating in tight range of 5700-6200 for last three months.
Technically, its consolidations phase lead to form the “Pennants" formation on weekly charts which is a continuation pattern indicating that the trend is intact and new move is going to start. Once the CNXIT index gives the breakout of 6200, then 6600 would be the next major resistance and on the downside break 5800, then more selling will be visible on index till 5300.
Last close: 5655
From first quarter of current year, BSE IT sector is consolidating in tight range of 5400-5830 which leads to form the “Pennants" formation on weekly charts which is a continuation pattern indicating that the trend is intact and new move is going to start. At Current juncture, one should wait for the breakout of 5830, then after more buying can be expected on the upside till 6250 whereas on the downside 4900 can be expect, if BSE IT trade below 5400.
Stock specific trading strategies
Last close: 2445
Infosys is one of the largest software Company with having major weight in IT index. On technical charts, stock is continue to trade sideways in range of Rs 2,300 – 2,550 from last three months resulting to form the horizontal resistance line with higher support line. On the charts Rs 2550 would be consider as key resistance and Rs 2,350 as key support on the downside.
Last close: 1248
The stock has been on a medium term uptrend since late April, 2012 after making the low of Rs 1,040. Thereafter it has started moving higher and registered the 52-week high of Rs 1,295. RSI and other momentum indicators are featuring bullish for the stock while it is comfortable trading above its 200EMA mark. On Friday, stock has breached its short term and medium term moving averages with good volume. Key resistance would be around Rs 1300-1320 and Support is seems to be around Rs 1210.
Last close: 392
In Bear market, Stock corrected sharply from the high of Rs 453 to Rs 380 levels. Stock is still trading below its 200 EMA which shows the weakness of stock. Key resistance would be around Rs 415-420 and Key support would be around Rs 380 for this week.
Last close: 490
Stock is trading in the tight consolidation range of Rs 460-520 levels from the past five months. On daily and weekly charts, the bias remains positive while the RSI and other select momentum indicators are also bullish for the stock. If trade and manage above Rs 520, then Rs 550 will consider as next resistance and on the downside 460 will act as good support for this week.
Last close: 2536
Stock has formed the “Bull Flag" formation on weekly charts which is a continuation pattern indicating that the trend is intact and the new move is going to start. Stock is comfortably trading above its 200 EMA on weekly charts which shows the strength of stock. Key resistance for the stock would be around Rs 2,780 and key support would be around 2400 for this week.
Last close: 383
Stock corrected sharply from the high of Rs 440 to Rs 330 levels with declining markets. Prior to the reversal, it traded sideways in range of Rs 340-360 levels for two weeks. After the breakout of same it has started moving higher resultant to breach the 200 EMA mark on daily charts so buying momentum can continue for coming session. Stock can face some resistance around Rs 420-440 levels while the support around Rs 360-350 levels for this week.
Last close: 722
Overall trend is bullish for the stock. Stock is comfortable trading above its 21 EMA 701, 50 EMA (Rs 685) and long term 200 EMA (Rs 662) marks that shows the positivity of stock. On the weekly chart, RSI and MACD are also in favours of buying from current levels. Stock is likely to face near hurdle around Rs 770-790 while the key support would be around 680 for this week.
Last close: 121
After giving the breakout of symmetrical triangle on weekly chart, stock witnessed the smart upmove from Rs 83-110 in December, 2011. Thereafter it is trading sideways from last five months with positive bias. Hexaware can face some resistance around Rs 135-140 levels while the support around Rs 112 for this week.
Last close: 745
It gained handsomely in the last Bull Run and rose from Rs 525 to Rs 960 levels in just two months. With reversal in the market trend, it retraced also in the same manner & retested the monthly support zone of Rs 550-570 levels. It bounced back thereafter which remained quite sharp resultant emergence of rising channel on daily charts. Now it’s comfortable trading above 200 EMA & formed the fresh buying pivots. Stock manage to sustain the level of Rs 780, then big upside move can be expected till Rs 900, on the downside key support would be around Rs 705 for this week.
Last close: 296
After making the 52-week low of Rs 245, stock has started moving higher & tested the level of Rs 325 in short span. Thereafter, stock faced some selling pressure which dragged down from Rs 320 to Rs 290 levels in the last few trades. Overall trend is bullish for the stock so every dips should be consider as buying opportunity. Key resistance would be around Rs 315-325 and the key support is seems around Rs 285 for this week.
Source: Mudit Goyal, technical analyst, SMC Global
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