tcs: TCS, Infosys expected to consolidate on a large scale next week: Ashish Kyal

“This is not the time when I think stellar results will be announced by TCS or Infosys,” said Ashish Kyal, Waves Strategy Advisors.

In the coming week these companies like TCS and Infosys will of course be releasing their numbers and if you look at the top sector that lost this week it was definitely IT. What’s happening here, which stocks look interesting and how would you rate the IT sector overall?

If you look at the entire IT sector and look at what has been happening in this sector, then this sector has started to lead the whole uptrend and for these past three days we can clearly see that the sector has been under pressure. So overall I think it will consolidate. This is not the time when I think TCS or Infosys will be announcing outstanding results.

I think we’re going to consolidate across a very broad spectrum. If I still need to pick something up, I might end up picking something mid-cap or small-cap, something like eClrex, which is a bit outside of the large-cap space and looks a lot more attractive than possibly a TCS. We can clearly see that after the buyback announcement in TCS there was a big move down and then a recovery. So I think it’s time for TCS and Infosys to be consolidated.

You’ve told us that IT is going to see some consolidation and some of these FMCG names like ITC are making a comeback, given the industry volatility, what are your top bets for the coming week or even slightly longer term?

Next week I might look at autos first as after a long time we are seeing some sort of traction in autos and Mahindra & Mahindra seems to be making a very good move higher. The stock has shown a very strong bullish candlestick formation and managed to outperform along with huge volume which is a plus. So Mahindra & Mahindra, one can take a long position here and hold a stop loss of Rs 827 for the target of possibly Rs 920 or higher. The next stock from the mid-cap, small-cap space is Sharda Cropchem. We can clearly see that the stock has shown a huge rise and consolidated and is now preparing for the third wave up again. So from now on, Sharda Cropchem can generate exorbitant returns. One can take long positions and keep a stop loss of 680 for the target of 755.

What do you think of a couple of those counters making big moves this week, names like RBL Bank coming under pressure, Escorts seeing quite a downtrend this week and on the earnings side we had names like Metropolis and Tata Power surging was? Anything that looks interesting or you want to bet on from this stock list?

If you talk about RBL Bank, I think there has been a very sharp correction in RBL Bank. It rose from Rs 140 to around Rs 128. That is a sharp correction. Therefore, I will certainly not bet on the RBL Bank at this point in time. Escorts has flipped again and dipped, I think it’s trading somewhere around Rs 1610 if I’m not wrong, but Tata Power if you look at all the stocks and compare that to Tata Power it’s quite the opposite. We saw a very strong breakout in Tata Power. It managed to surpass that mark of Rs 260 just two or three days ago, while staying at a level of around Rs 278. I think this is an opportunity to get into the stock after a month of consolidation.

So it’s been moving in a triangle pattern for about six, seven months and has had a very big breakout to the upside. Tata Power should surpass 300 rupees very soon in my opinion and on the other side 260 rupees will be a key support. So Tata Power is my first choice out of these three. tcs: TCS, Infosys expected to consolidate on a large scale next week: Ashish Kyal

Jaclyn Diaz

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