Tech Mahindra Limited is engaged in the business of
computer programming, consultancy and related services. The Company's segments
include Information Technology (IT) Services and Business Processing
Outsourcing (BPO). The Company operates in various sectors, including telecom
business and enterprise solutions business.
The company has successfully carried out projects,
which is likely to show better performance, not only supported by good
fundamental but also technical breakout. Last month company has announced its
September quarter results which was in line with street estimate. Thus,
we feel that this company is expected to provide good returns to investor portfolio.
On chart, stock prices are volatile.
The stock hit 52-weeks’ high of Rs. 564 in May 2016, then price revered to 52
weeks’ low of Rs. 405.50, in last month, down by 28.10 percent from its
52-weeks’ high. Currently, stock price is trading at Rs. 454.15. The stock
price witnessed 12 percent rise in the last 1 month, from the 52-week low. We
feel that there is more steam left and the rally is likely to continue.
Technically on a different time scale of daily, weekly & monthly chart
stock price started making higher tops and higher bottoms pattern. Tracking
Bollinger Band front price of. Rs. 454.15 is ridding the ‘Upper Bollinger Band’
and the bands are widening, indicate ongoing
positivity will continue in the stock price.
We
also witnessed a parallel channel breakout started from May 2016, in the
channel stock price has touched upper channel then lower channel thrice, day
before yesterday stock price at Rs. 454.15 has closed above the upper channel
of the parallel channel, we believe stock price will continue its rally towards
north, which will take it towards previous high swing.
Momentum
Oscillator, MACD (Moving Average Convergence & Divergence) on a weekly chart,
is heading towards north to give positive crossover, favouring the bullish
view, which could witness the Tech Mahindra marching higher.
RSI
(Relative Strength Index) 14-week on a weekly and monthly chart are in rising
mode and not yet overbought, which has more room left on upside. The 14-week
RSI also trade above its 9-week EMA, which is positive signal, indicate better
perform in the weeks to come.
The
trend intensity indicator demonstrates that the stock is gaining strength as
months pass by. The psychological sentiment towards the stock remains positive.
If one were to go by the volume data, a higher upswing is seen on the stock
price.
The
stock is also looking positive on the monthly chart, which foretells well for
the long term uptrend of the stock. We believe the stock has the potential to
move higher in the coming weeks and therefore recommend a buy at CMP and adding
more on dips.
Looking towards the chart
pattern and study i.e. Bollinger Band, RSI and MACD, we believe stock price may
extend its rally towards Rs. 520 levels, whereas Rs. 420 will act as a strong
support level.
