The stock of L&T Technology Services (LTTS) achieved new highs of Rs 4,975, driven by a significant rebound observed on Wednesday, attributed to a short covering rally.
At 11:03 am on December 7, the stock of L&T Technology Services was trading at Rs 4,899, up 40.05 points or 0.82 percent.
L&T Technology Services' stock touched highs of Rs 4855 on December 4 and then saw a minor pullback. This pullback halted in the zone of Rs 4625-4615, coinciding with the 13-day EMA level and the 38.2 per cent Fibonacci retracement level of its previous upward move (Rs 4,203-4,855).
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"The stock found support in the zone of Rs 4625-4615 and experienced a sharp rebound on Wednesday. This reversal from the support zone was backed by over two times the 50-day average volume. The 50-day average volume was 1.60 lakh, while on Wednesday, the stock registered a total volume of 3.88 lakh," stated Sudeep Shah, Head of technical and derivatives research at SBI Securities.
"Currently, the stock is trading above its short and long-term moving averages. These averages are on a rising trajectory and are in the desired sequence, suggesting a strong trend. Notably, the daily RSI took support in the zone of 60-62 and experienced a sharp rebound, which is a bullish sign according to RSI range shift rules," Shah added.
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On the derivative front, a short covering rally is clearly visible as December futures have surged by 3.60 percent. Meanwhile, the cumulative Open Interest (OI) of the current, next, and far series has declined by nearly 12 percent. Looking at the option chain, either call buying or call short covering is evident on 5000 to 4600 strikes. Simultaneously, put writing is also visible on 4900 to 4500 strikes. This indicates an overall bullish sentiment in the derivative space.
Based on these observations, Shah expects the stock to continue its upward movement and test levels of Rs 5110, followed by Rs 5200 in the short-medium term. A stop loss can be maintained at Rs 4710 on a closing basis.
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