TCS Q3 net profit seen 9% up; how to trade the stock ahead of results After a stellar performance from Infosys last week all eyes are on Tata Consultancy Services (TCS) which is scheduled to report its results for the quarter ended December 31 post market hours today. According to analysts, the company is likely to lead the sector on dollar revenue growth in notably a seasonally weak quarter due to furloughs, fewer working days and employees going on vacation. The technology major is likely to report a rise of 8.98 per cent in profit to Rs 5,124.50 crore from Rs 4,702 crore reported in the previous quarter, according to an ET Now Poll. Most brokerages are of the view that the company may report a 3.5 per cent revenue growth in dollar terms for Q3FY14 and give a positive outlook for FY15. After rallying over 70 per cent in 2013, the IT major is putting up a strong show in 2014 as well gaining nearly 10 per cent so far in the year. Historically, the stock has seen profit booking after the announcement of results and hence traders should adopt a cautious stance. The stock has already run up in anticipation of a good result and any negative surprise in the quarterly result could lead to decent profit booking. According to analysts, demand environment for IT stocks looks robust with green shoots appearing in most developed economies. Investors who own the IT stock should hold on to it as the stock is likely to move higher following earnings upgrades over the next few quarters. In 2013, TCS made low at 1,250 levels and high at 2,258. It closed the year 2013 with a 73 per cent gain. From that key moving average, TCS has been rallying smartly since the beginning of December 2013 and can be said to be in an uptrend. It has been forming higher top higher bottom on the daily chart, which is a sign of an uptrend as per Dow Theory. The company has shown consistent results in the last few quarters and has emerged as a market leader in terms of setting the trend for the entire IT sector. On yearly, monthly and weekly charts, the stock is trading in a long-term uptrend. Technical chart is also confirming TCS as a growth stock, say analysts. However, it is trading in overbought zone on monthly, weekly and daily charts and after the results it may be rangebound for some time and then may show strength in the medium to long term, with a target of Rs 2,700 and then Rs 2,900. We have collated views and recommendations from various analysts on how to trade TCS ahead of its results: Vinit Pagaria, Senior Vice President - Investment Strategies at Microsec Capital Ltd TCS has run up from Rs 2,000-odd level a month ago to test a high of Rs 2,385 on Tuesday. The stock has already run up in anticipation of a good result and any negative surprise in the quarterly result could lead to decent profit booking. The support levels on the downside are Rs 2,265 and Rs 2,100. On the upside, a move beyond 2,400 could lead to a consolidation in the range of Rs 2,300-2,600 in the next couple of months. Historically, the stock has seen profit booking after the announcement of results and hence traders should adopt a cautious stance.
Posted on: Thu, 16 Jan 2014 06:56:20 +0000
Trending Topics
Recently Viewed Topics
© 2015