TCS could well surpass 4000 levels to hit a fresh record high post Q2 results: Sachin Gupta of Choice Broking

A momentum indicator RSI & Stochastic witnessed positive crossover along with the rising volume in TCS; hence, we are expecting a bullish rally in the stock for the upside target of 4100/4150 in the short term while on the downside, 3700 is good support for the stock, Sachin Gupta, AVP, Research at Choice Broking – said in an interview with Zeebiz’s Kshitij Anand. Edited excerpts:

Q) A volatile week for Indian markets but bulls managed to hold the fort. What are your views on markets and key levels to watch out in the coming week?

A) The benchmark index moved nearly 2 per cent in comparison with the previous week along with a strong closure while Bank Nifty gained nearly 1.5 per cent.

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On the sectoral front, the main pullers to help Nifty climb higher where the IT sector that rallied by about 4.5 per cent.

Other sectors which emerged as top gainers were media (up nearly 5%), Auto (ip 4.2%), and Energy sector (up 4%) while loses were seen in FMCG and Pharma sectors with 1% and 0.5% respectively.

Stocks like Tata Motors showed an extraordinary gain of above 14 per cent, followed by ONGC which was up 10 per cent, and Titan Company rallied more than 9 per cent.

On the technical chart, the Nifty has formed a bullish candlestick pattern and settled above the one-week highs. A momentum indicator RSI moved above 60 levels while Stochastic has indicated positive crossover on the daily timeframe.

On the upside, the Nifty50 has a strong resistance placed at 18000 levels, and a break above this level can take the market to a new milestone, where we can see the index trading between 18200 and 18400 levels. On the downside, 17700/17500 is the crucial support for the week.

Q) Do you think fresh record highs are possible in the October series especially after the RBI policy meeting outcome which promised liquidity and at the same time maintaining the accommodative stance?

A) Yes, we believe that fresh highs are possible in the near term considering the supportive liquidity in the market.

In the latest MPC meet, the Reserve Bank of India (RBI) maintained an accommodative stance which was in line with street expectations.

Though, RBI’s commentary was more dovish against the expectations of hawkish given the increased fuel, and energy price risk.

RBI kept the GDP forecast unchanged for FY22 and the current inflation rate is within the central bank target. RBI seems to be comfortable with the inflation trajectory as it cut the inflation forecast target for FY22.

Q) Sectorially, IT, Auto & Consumer Durable stocks lead the rally. What led to the price action?  

A) After witnessing a steep fall in the previous week, value buying emerged in IT stocks this week. Last week’s downfall can be attributed to the spike in treasury yields which weighed on Wall Street’s IT stocks.

Auto and Consumer durable stocks witnessed strong buying traction as the Festive season starts.

Q) What is your call on TCS post September quarter results?

A) The country’s largest IT services provider company TCS has reported a net profit of Rs. 9624 Crore over revenue of Rs. 46867 cr for the September quarter.

As per the report, the revenue grew 15.5% on a year-on-year basis. Technically, the stock has performed well in the last couple of weeks after a consolidation breakout at 3400; we saw the one-way rally in the stock, made high at 3981.75 in Sep’21.

Thereafter, the stock retreated almost 6 per cent from the high and made a low at 3707.45 levels on 4th Oct’21. The stock has regained and given a breakout of the Flag pattern on the daily chart, which indicates a continued upward move for the near term.

A momentum indicator RSI & Stochastic witnessed positive crossover along with the rising volume. Hence, we are expecting a bullish rally in the stock for the upside target of 4100/4150 in the short term while on the downside, 3700 is good support for the stock.

Q) Broader markets slightly outperformed the benchmark indices. What is your view on the small & midcap stocks? Especially the ones that are hitting fresh 52-week highs on a daily basis.

A) High liquidity in the market has supported the upward rally in the indices -- the Midcap & Smallcap have performed well in the last year.

A good momentum has been witnessed in almost all the midcap & smallcap counters. Most of the stocks were doubled from their respective 52-weeks low and are still showing good strength on the daily charts.

For the coming days, we expect the upward move may continue in both indices. The midcap index may reach towards the new milestone at 26400/26600 levels while on the downside, the support comes around 25300/25000 levels.

Stock-specific moves will be seen in the market, few stocks like Lemon Tree, NLC India, Usha Martin, VIP Industries & Aarti Industries could be a good bet for the investors.

Q) Your top 3-5 trading ideas for the next 3-4 weeks?

A) Here is a list of top trading ideas:

BSE: Buy| LTP: Rs 1337| Target: Rs 1500| Stop Loss: Rs 1250| Upside 12%

On a weekly chart, the stock has given a break from its major resistance level of 1300 as well as it gave a close above the same with a rise in volumes that suggests a northward direction in the counter.

 
Furthermore, the stock has formed a bullish Marubozu candle on the weekly chart which adds further strength in the counter.

A momentum indicator RSI and MACD both have shown positive crossover on the daily chart which adds more bullishness to the price.

Moreover, the stock has been trading above its 21-Days Moving Average which suggests that the stock has a great potential to move further.

As per the above technical parameters, we are expecting a bullish move in the stock for the target at 1440/1500 levels while on the downside, the support comes at 1250 levels.

NLC India: Buy| LTP: Rs 69.45| Target: Rs 90| Stop Loss: Rs 55-60| Upside 29%

The stock has been rising for the last three weeks without enabling a selling pressure. The stock has also shifted above 200-weeks EMA, which indicates a bullish momentum for the long term.

On the daily chart, the price has confirmed the Trendline breakout and moved above it with higher volume also a price shifted above Upper Bollinger Band formation & 50-days SMA, which support the bullish presence in the stock.

A momentum indicator RSI, Stochastic & MACD is supporting the bullish trend along with the positive crossover on the daily timeframe.

As per the above technical parameters, we are expecting a bullish move in the stock for the target at 80/90 levels while on the downside, the support comes at 55/60 levels.

Dwarikesh Sugar Industries: Buy| LTP: Rs 75.70| Target: Rs 85-100| Stop Loss: Rs 65-70| Upside 12%

On the daily chart, the stock has given a breakout of the upper band of falling wedge pattern which points out strength in the counter.

Furthermore, the stock has given a breakout of the Accumulation Phase with a positive crossover of 50*100 Days Moving Average which can be considered as a Bullish Crossover which shows a Bullish movement in the counter.

A daily momentum indicator RSI and MACD both have shown positive crossover on the daily chart which adds more bullishness to the price.

On the other hand, Price has shifted above “Ichimoku Cloud” where TenkanSen has crossed KijunSen, which indicates bullish signals for the near term.

As per the above technical parameters, we are expecting a bullish move in the stock for the target at 85-100 levels while on the downside, the support comes at 70/65 levels.

Disclaimer: The views/suggestions/advice expressed here in this article are solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.