ICICI notes 14% surge in HCL technologies within 3 months

The technology space has been significantly resilient in the last few months of 2020 as the market became increasingly volatile. ICICI Securities is of the belief that the technology sector is all set for soaring after a dose of consolidation. HCL Technologies stock prices have fallen down to Rs 800 levels after recording a lifetime high in the Rs 900 levels in the month of October.

“As long positions are still intact in the stock, we believe it will resume its upward momentum in the short-term,” ICICI Securities said in its report. The brokerage has provided HCL Technologies with a ‘buy’ rating along with a target price of Rs 980 and three months duration. It also recommends buying in the price range of Rs 820- Rs 840.

Following are the key highlights of ICICI Securities’ report on HCL Technologies:

  • The stock’s open interest has been gradually increasing over the past few months and has increased by almost 50 percent since August, alongside the price movement due to the formation of long positions in the stock.
  • Despite the stock’s recent profit booking, its open interest has remained intact suggesting that long bias is still intact. “We feel the stock is well placed to move towards its recent highs of 900 and above in coming days,” ICICI report says.
  • The stock has the highest call base at the options front at 900 strikes followed by 850 strikes. Since it has started trading above the 850 strike level, the closure of the positions is evident at ATM strikes and positions are moving to deep OTM strikes.

“We expect continued upsides in it, in the coming sessions. At the same time, Put open interest base is placed at the 800 strikes from where the stock has seen a reversal recently,” ICICI reports added.

“In the last three months, noteworthy delivery volumes increased in the stock at 790-810 levels. We expect levels around 800 to act as an important support for the stock in the short-term. In the mid-part of the November series, it already recovered from these levels. We expect a positive bias to remain intact above the said support level. Historically, the stock has seen its upward momentum towards its mean+3*sigma levels before witnessing any change of trend. Currently, mean+3*sigma for the stock is placed near 940 levels. At the same time, immediate support can be expected near its mean+2*sigma placed near 800 levels,” the report on HCL Technologies emphasises.

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