Tech Mahindra shares rallied almost 6 percent on February 15 amid directionless trade in the benchmark Nifty 50.
The stock traded near the high of the previous month. On the technical daily charts, it formed a robust bullish candlestick pattern after several months, on big volumes. The stock made a higher high and higher low formation for the second consecutive session.
Further, it has broken out nicely from a long downward sloping resistance trendline adjoining the highs of September 12, 2022, and January 24, 2023, while taking support at the upward sloping support trendline adjoining lows at multiple touchpoints since January 6, 2023.
The stock rallied 5.86 percent to close at Rs 1,071.4 on the NSE, the biggest single-day gain since July 30, 2021.
The rally took the stock into the momentum zone of the Bollinger band with expansion on both sides. Experts said if the stock crosses the 200-day EMA (exponential moving average) of Rs 1,094, it could rally further.
Currently, Tech Mahindra shares are trading above key moving averages (5, 9, 21, 50 and 100-day EMA as well as 200 DMA), which is also a positive indication, outperforming even the Nifty IT index that was up 1 percent.
“Tech Mahindra has been a laggard in the Nifty IT pack and has undergone a nine-month time correction. The rally in the stock today is aided by volumes and the stock is trading around its previous month's high,” said Viraj Vyas of Ashika Stock Broking.
Vyas said if the stock sustains above Rs 1,075, it will stage a breakout and if assisted by volumes, it can target Rs 1,100-1,120 first, after which it can head towards the Rs 1,200 mark.
Vidnyan Sawant, AVP technical research at GEPL Capital, said the stock has immediate resistance at the Rs 1,080 level and if it sustains above that level then the stock will move towards Rs 1,125-1,165 in the short to medium term.
Earnings front
The IT services provider reported earnings on January 30 that were better than analyst expectations, with consolidated profit growing 0.9 percent sequentially to Rs 1,296.6 crore and revenue increasing by 4.6 percent to Rs 13,734.6 crore for the quarter ended December.
Revenue growth in dollar terms was 1.8 percent and in constant currency terms 0.2 percent on a sequential basis.
The company’s operating performance was strong. Earnings before interest, tax, depreciation and amortisation climbed 8 percent quarter-on-quarter to Rs 2,144 crore, with a margin expansion of 50 bps over the previous quarter.
“The numbers reflect resilience as we continue to work on the expansion of operating margin,” said Rohit Anand, chief financial officer at Tech Mahindra.
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