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Stock Mantra: HCL Technologies at 52-week high, could further rally 10-20% in 3-4 months

Although the stock has underperformed the IT index, its breakout from a consolidation phase on August 5 suggests it is poised for a further upside.

August 24, 2021 / 11:54 AM IST
 
 
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HCL Technologies, an Indian multinational information technology services company, has rallied 22 percent so far in 2021 compared with an almost 18 percent gain in the Nifty 50 and a 40 percent jump in the S&P BSE IT Index.

Although the stock has underperformed its sectoral index, on the technical charts, the recent price gains suggest that its breakout from a long-term consolidation phase on August 5 signals a further upside.

With a market-capitalisation of over Rs 3.15 lakh crore, HCL Technologies hit a 52-week high of Rs 1,178.05 on the BSE on August 23. The momentum could take the stock towards Rs 1,270-1,360, which translates into an upside of 13-22 percent from the August 20 closing price of Rs 1,117.15.

8B. HCL TECH_Daily chart_23.08.21

The company’s share price jumped on August 23 after the research firm CLSA retained a “buy” call on the stock and raised the target to Rs 1,320 from Rs 1,180. CLSA increased its FY23/FY24 EPS estimates by 1-2 percent.

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The IT company said on August 17 it signed a five-year deal with Wacker Chemie AG, a German multinational chemical company, to establish a modernised digital workplace and improve its quality-of-service delivery.

“Prices went through descent price and time-wise correction since January 12, 2021, and recently it has broken out from the long-term consolidation formation on August 5,” said Jignesh Pandya, senior research analyst at Monarch Networth Capital.

Consolidation marked with A-B-C completed its price and time-wise correction exactly above the lower band of the rising channel line and since then it has shown signs of strength and rising in a higher top and higher bottom formation.

“Momentum oscillator relative strength index (RSI) is continuously sustaining above 70 level, indicating a positive build-up in momentum, which will transform into a positive price action for the stock,” he said.

Pandya recommends that investors buy the HCL stock at the current market price or on dips at Rs 1,100-1,080, keeping a stop-loss at Rs 970 and a target of Rs 1,270-1,360 in the next 3-4 months.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Kshitij Anand is the Editor Markets at Moneycontrol.

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