Breakout stocks: CoForge, TechM, Sonata can rally up to 14%, suggest charts

The Nifty IT index as underperformed the benchmark Nifty 50 so far this year. Will the upcoming Q4 results revive sentiment at these counters? Charts suggest that these 4 IT stocks look promising.

The Nifty IT index has underperformed so far this calendar year, with a loss of 0.7 per cent, as against a 3.5 per cent rally in the benchmark NSE Nifty index. In fact, the latter has scaled newer heights in recent trading sessions, whereas the IT index has still failed to hit a new high post January 2022. In comparison, the Nifty IT is still 10.5 per cent shy from its peak at 39,447.

With just a week to go for the Q4 earnings season to start, will this revive sentiment at these counters? For the records, TCS shall kick-in the March quarter earnings season on April 12 (Friday) followed by Infosys on April 18 and Wipro on April 19.

Meanwhile, here are 4 IT stocks that charts suggest look ripe for some upside in the near-term.

Nifty IT

Current Level: 35,290

Potential Upside: 4.6%

Support: 33,250

Resistance: 35,567; 36,000

The Nifty IT index is looking to arrest its fall which started in mid-February. The index is seen seeking support around the super trend line on the weekly scale at 33,750 levels. 

Meanwhile, on the daily scale, the outlook seems mixed as the price-action suggests that the underlying trend is negative, as the index quotes below the 100-DMA which stands at 35,567. Further, the 20-DMA is below the 50-DMA, and now the 20-DMA which stands at 36,000 levels, seems on course to dip below the 100-DMA as well.

On the other hand, key momentum oscillators such as the 14-day RSI (Relative Strength Index) and Stochastic Slow have turned favourable on the daily scale. Hence, a pullback rally cannot be ruled out.

As such, as and when, the Nifty IT index breaks and closes above the 36,000-mark, it can potentially surge to 36,900 levels, wherein stands the 50-DMA. Whereas, the next major support for the index is seen around the 200-DMA at 33,250 levels. CLICK HERE FOR THE CHART

Tech Mahindra

Current Price: Rs 1,265

Potential Upside: 13.8%

Support: Rs 1,220; Rs 1,200

Resistance: Rs 1,300; Rs 1,315; Rs 1,370

Tech Mahindra has been making higher highs and higher lows on the weekly scale since June 2022. The stock is presently seen attempting to make a higher low, with near support seen around the 200-DMA at Rs 1,220 followed by the 50-WMA (Weekly Moving Average) at Rs 1,200 levels.

Given the positive divergence on key momentum oscillators, the stock is expected to display strength in the near-term. On the upside, the stock faces near resistance around Rs 1,300, Rs 1,315 and Rs 1,370; above which the stock may continue its trend and register a higher high around Rs 1,440 levels. CLICK HERE FOR THE CHART

Sonata Software

Current Price: Rs 744

Potential Upside: 10.9%

Support: Rs 710; Rs 700

Resistance: Rs 750

Key momentum oscillators such as the RSI, Stochastic Slow and MACD (Moving Average Convergence-Divergence) have turned favourable for Sonata Software on the daily scale. The stock is expected to seek support around Rs 710 and Rs 700 levels, and on the upside attempt a rally towards Rs 780 and Rs 825 levels. Near resistance for the stock is seen at Rs 750. CLICK HERE FOR THE CHART

Mastek

Current Price: Rs 2,625

Potential Upside: 14.3%

Support: Rs 2,445

Resistance: Rs 2,652; Rs 2,702; Rs 2,810

Mastek witnessed an over 21 per cent fall from its February 19 high of Rs 3,145 to a low of Rs 2,480 on March 28, i.e. little more than a month. In the process, the stock came within striking distance of testing its 200-DMA which now stands at Rs 2,745.

The stock is now seen testing resistance around its 20- and 200-DMAs at Rs 2,652 and Rs 2,702, respectively. On the upside, the stock has other near resistance around Rs 2,810. Given, the recent breakout on technical indicators, the stock may attempt to clear these hurdles, and then open the doors for a potential rally towards Rs 3,000-mark. CLICK HERE FOR THE CHART

CoForge

Current Price: Rs 5,790

Potential Upside: 7.4%

Support: Rs 5,550

Resistance: Rs 5,820

Similar to Mastek, CoForge too witnessed a sharp 20 per cent crack in the Feb-March period, and tested its 100-DMA. CoForge 100-DMA stands at Rs 5,550 level; the same is likely to act as a support for the stock. 

Presently, the stock is seen testing resistance around its 20-DMA at Rs 5,820. Sustained trade above the same can trigger a rally towards the 200- and 50-DMA at Rs 6,100 and Rs 6,220, respectively in the near-term. CLICK HERE FOR THE CHART