1 Small Cap IT Stock To Buy For Decent Gains In Short Term: HDFC Securities

IT stocks have declined sharply from their peak primarily on the back of weak margins and earnings, higher expenses incurred on hiring and retaining employees and as valuation for the sector has expanded considerably when compared to last 10 year period. Amid such a landscape, renowned brokerage firm HDFC Securities has come out with a positional call based on technical analysis of the stock by the firm's research experts. The stock ideas are based on the market movements by examining historical data, like price and volume.

Intellect Design Arena:

This is a small cap software focused firm that offers financial technologies for banking, insurance and other financial services. The stock in the current correction has been battered severely from its 52-week high price of Rs. 986.65.

For the scrip, HDFC Securities has given a 'Buy' call for a target price of Rs. 750. The horizon set out for the investment is 3 months and the suggested stop loss is Rs. 575. At the current price level of Rs. 628.8 per share, investors can possibly get a return of over 19% in the short term.

 

Observation on the stock as put by the brokerage:

The weekly timeframe chart of this IT mid cap stock Intellect Design Arena Ltd indicate an attempt of higher bottom reversal pattern around Rs 590-600 levels.

After the formation of bullish hammer or Doji type candle pattern at the lows in last week, the stock price has shifted into intra-week consolidation so far this week and is now making an attempt to break above the hurdle of Rs 630 levels.

The formation of long lower shadows on the weekly candle in the last two weeks signal emergence of buying from near the support of Rs 600-590 levels.

Weekly 14 period RSI has placed around 40 and is expected to turn up from there. The lower area of 40 seems to be a bullish lower range (range of 75-40 levels) and its turning up from there could indicate strengthening of upside momentum.

The overall chart pattern of INTELLECT indicates long trading opportunity as per the brokerage.

 

Disclaimer:

Stock market investment is subject to risk associated with the stock markets and hence investors need to be very careful. Neither the author, nor the brokerage, nor Greynium Information Technologies Pvt Ltd would be responsible for losses incurred based on a decision to buy into the stocks based on the above article.