HCL Technologies breakout may lead to target of 1640

Technology stocks were going through some sort of bear phase for the past few weeks.The appreciation in Currency was leading to the the fall in prices.HCL Technologies stock was also correcting and in my earlier post on HCL Technologies,targets around 1300-1320 were expected from 1430-1440.The stock made lows around 1270-1280 in that correction.

Now all major tech stocks are coming out of that bearish phase.On technical charts,these stocks are giving breakouts above those trading ranges.The Rupee depreciation is further fuelling the rally in prices of IT Stocks.

HCL Tech kept trading between range of 1300 on lower side and 1450 on higher side for the past several weeks.The price correction seems over now.In today’s trading session.the stock was able to breach that trading range.This breakout happened with decent trading volumes which indicates the confidence of traders in this breakout.

Technical Call

HCL Tech Daily Chart [source-TradeRacer]

If you see in the below figure of daily technical chart of HCL Tech,you see the stock clearly broken above the upper trend line with high volumes.Also the stock was able to close above that line at the end of the day.This breakout gives us a possible move of ₹ 190 in the stock from the price level of breakout.

If the stock is able to maintain above that trend line for 2-3 trading sessions,the stock may see a spurt of around 10% from the current market price.The price target for the stock comes out to be ₹ 1640.The time duration for the trade can be around 2-3 weeks.So this trade may lead to profit of 10% on your capital put into the trade in less than a month of time.

The stop loss for the trade is little wider than someone would have wanted.Technically,this comes around 1350.Personally,I am never in favour of keeping wide stop losses.It may not be a good idea to wait for the stop loss to get triggered in case the stock doesn’t move higher.I have my own long position in this stock and i will be keeping stop loss somewhere around 1420.There are multiple supports in 1420-1445 range.Moreover,if the stock closes below 1435-1440 for 2-3 days,this pattern shall be violated and i would be no more interested in keeping my position.I would be keeping my position till the stock maintains above that line.

 

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