Trade on TechM, Wipro and Mindtree for amazing return among IT stocks’



Both TCS and Infosys hold 27 % each in the index strength and they are likely to become leader alternatively to help index high up

After the consolidation of many weeks, finally IT index has set a breakout from Cup & Handle technical foundation. Cup & Handle breakout is symbolized as a bullish momentum persistence pattern. High side targets of this breakout are 17,500 -18,500 – 20,500 in future months. IT index has tradable future and traders can take benefit of that tool.

IT

IT stocks tend to perform healthier when there is amplified volatility in the market as they are measured as a safe haven in a volatile time interval. The Lok Sabha election result is scheduled on this 23the May and this will lead to amplified volatility for an upcoming month. This is one of the causes of bullishness in IT stocks.

Factually, the IT index has provided a superior outcome in six months after the election consequence. The IT index has given 43.8, 91.3 and 29 % returns in 2004, 2009 and 2014, respectively. Here returns are calculated from 1st of May to 30th November in the respective years.

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Another aspect that will help IT stocks is dollar power. USDINR is bouncing back from the gathering of the support area. The zone traders should monitor to 68.30. If the currency does not fluctuate this area, then we can suppose a sharp pullback in USDINR case. In the other condition, 70.3 is the breakout state and once it crosses this state, we can imagine it to reach 72-74 zone in the future weeks. If that has occurred then it will be a great supporting reason for the IT stocks.

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Both these issues will support IT stocks overtake in future months but the stock will lead the rally is the million price question. However we consider both stocks are controlled for the upside, there are other IT stocks that can give better returns. Tech Mahindra, Wipro, and Mindtree are our three top choices from this sector.

Tech Mahindra: Buy

Target: Rs 1,030

Stop loss: Rs 730

Upside: 25 percent

After the consolidation phase, the stock has rallied from Rs. 725 to 840. After this advantage, the stock has modified to retrace 50 % of the rally. Now again stock has restarted the positive rally and heading towards Rs 925 to 1,030 in future weeks. The trader should accumulate between Rs 800 to 830 and keep a stop loss at Rs 750.



Tech Mahindra

Wipro: Buy

Target: Rs 350

Stop loss: Rs 250

Upside: 18 percent

After the throwback towards the escape level, which was also a retracement support area, the stock has rallied shrilly and is heading towards the new sky. The trader should put together between Rs 285-300 and suppose upside till Rs 325-350 while a stop loss at Rs 250.

Wipro

Mindtree: Buy

Target Rs 1200

Stop loss: Rs 940

Upside: 20 percent

The stock is input together phase for the previous many weeks and it is on the approach of the breakout from the resistance state. Here Rs 1,000 is the polarity level and has performed as strong resistance in the earlier. Once the stock reaches above Rs 1,000, it is a solid buy.

The investor can buy above Rs 1,000 and guess upside till Rs 1,100-1,200. Once it breaks out from this state, Rs 940 as a stop loss.