Kunal Bothra
Market Expert, ET NOWKunal Bothra has over 10 years of experience in financial markets. With expertise in understanding markets, and competency in technical, behavioural, and statistical analysis, Bothra is one of India's finest technical analysts. Known to be an excellent stock picker, he was earlier with the Edelweiss Group and LKP Securities.
Is it time to turn contrarian on IT counter after TCS’ Q4 earnings?
Every quarter, the earnings season for our market kicks off with IT majors Infosys and TCS.
Infosys delivered its results last week and TCS will do so later on Tuesday.
There are already talks in terms of business taking a hit, and the entire sector going through a tough patch. However, I would try and showcase some technical data points that could assist you in taking position on the IT counter.
TCS is a relatively low-beta stock, and one example of this is that in last 30 months, it has been trading in a band of 14 per cent from its 200-daily SMA (simple moving average).
The slope of the 200-DMA is absolutely flat. It indicates that extreme positions have been taken to go contrarian on the stock, purely from a trading perspective.
Now in terms of TCS’s price performance post earnings, here is an interesting data point:
(Data includes last 30 quarters)
This indicates that historically the immediate reaction of the stock in a time frame of one day to 15 days has been extremely flat; just an average of 1 per cent deviation from the closing price, which is abysmally low.
Now, the interesting aspect is the current positioning in terms of technical indicators.
1. Average RSI(14) reading for TCS when it enters into result day is 53, since the last 24 quarters
2. Current RSI reading 32, is the lowest in the last 24 quarters
3. Lower RSI indicates the inherent weakness in stock trend
4. If RSI<40, the reaction is largely positive after a 15 day period.
This data could be interesting for a positional trader, with respect to technical readings on the RSI.
The question which could be answered post result would be: is it time to be contrarian on IT now?
(Views expressed in this article are author's own and do not represent those of ETMarkets.com)
Infosys delivered its results last week and TCS will do so later on Tuesday.
There are already talks in terms of business taking a hit, and the entire sector going through a tough patch. However, I would try and showcase some technical data points that could assist you in taking position on the IT counter.
TCS is a relatively low-beta stock, and one example of this is that in last 30 months, it has been trading in a band of 14 per cent from its 200-daily SMA (simple moving average).
The slope of the 200-DMA is absolutely flat. It indicates that extreme positions have been taken to go contrarian on the stock, purely from a trading perspective.
Now in terms of TCS’s price performance post earnings, here is an interesting data point:
(Data includes last 30 quarters)
This indicates that historically the immediate reaction of the stock in a time frame of one day to 15 days has been extremely flat; just an average of 1 per cent deviation from the closing price, which is abysmally low.
Now, the interesting aspect is the current positioning in terms of technical indicators.
1. Average RSI(14) reading for TCS when it enters into result day is 53, since the last 24 quarters
2. Current RSI reading 32, is the lowest in the last 24 quarters
3. Lower RSI indicates the inherent weakness in stock trend
4. If RSI<40, the reaction is largely positive after a 15 day period.
This data could be interesting for a positional trader, with respect to technical readings on the RSI.
The question which could be answered post result would be: is it time to be contrarian on IT now?
(Views expressed in this article are author's own and do not represent those of ETMarkets.com)
