Chartist Talk: IT stocks to extend rally? This CEO picks 2 stocks with 20-25% upside potential
The Nifty IT charts suggest this is more than a relief rally. On the monthly timeframe, Nifty IT has formed back-to-back bullish engulfing candles. That is a strong reversal signal after a long stretch of underperformance, said Rahul Ghose of Octanom Tech and Hedged.
Rahul Ghose, Founder and CEO of Octanom Tech and Hedged, expects the IT sector to extend its rally further, as chart patterns suggest that the current uptrend is more than just a relief rally. "On the monthly timeframe, Nifty IT has formed back-to-back bullish engulfing candles. That is a strong reversal signal after a long stretch of underperformance," he said in an interview with Moneycontrol. With the IT index showing signs of strength, Ghose believes Coforge is a stock worth accumulating on every pullback.
He also sees a similar chart structure in Tech Mahindra and recommends keeping the stock on investors' radar. "Both are heading into all-time-high territory, where there is no overhead supply. That makes precise targets hard to set, but technically a 20–25 percent upside is possible over the medium term," he said. Do you expect the rally in the Nifty IT index to extend further from a technical perspective?
Yes. The charts suggest this is more than a relief rally. On the monthly timeframe, Nifty IT has formed back-to-back bullish engulfing candles. That is a strong reversal signal after a long stretch of underperformance. On the weekly chart, an inverse head-and-shoulders pattern is taking shape. A decisive weekly close above its neckline would add a measured-move target to the structure. The momentum is already visible: the index reclaimed 32,500 on Friday, having gained about 17.7 percent over the past month.
After a near-18 percent move in a month, some consolidation would be healthy. I would use dips to accumulate rather than chase strength. Do you expect Nifty 50 to break out and sustain above 23,200? Yes. On the weekly chart, Nifty has formed a Morning Star at the 22,180 support, followed by a strong bullish candle, a classic reversal from a well-defended zone. Friday’s close of 23,053 was the first close above 23,000 in eight sessions.
Short-term targets are 23,500–23,600, with 22,180 as the key support. Do you see a greater likelihood of crude oil prices moving lower rather than higher in the coming weeks? Yes, on a risk-reward basis. Crude may look bullish in the very short term, but it is approaching a major resistance zone of Rs 10,100–10,200 per barrel on MCX, followed by Rs 10,400. Prices have topped out around this zone multiple times.
That kind of overhead supply rarely gets cleared without a fresh, sustained trigger. MCX November crude tested Rs 9,828 last week before settling near Rs 9,650. At current levels, risk-reward does not favour fresh buyers, barring intraday trades. The more probable path over the coming weeks is a rejection from the resistance zone rather than a clean breakout. Which two stocks are on your radar for the coming week?
With the IT index turning strong, this is a stock to accumulate on every pullback. Tech Mahindra has a similar chart structure and is worth tracking alongside. Both are heading into all-time-high territory, where there is no overhead supply. That makes precise targets hard to set, but technically a 20–25 percent upside is possible over the medium term. The stock is taking support at a rising trendline after a strong set of numbers.
The chart supports a move towards Rs 4,100–4,200. Do you see the possibility of a fresh leg of sharp upside in Apollo Hospitals? Yes, the setup is promising. On the monthly chart, Apollo has formed a classic hammer, with support at both a rising trendline and the monthly 20 EMA. When a long-term trendline and a key moving average converge at the same zone, it usually marks a high-quality support area.
The stock gained 9.3 percent this week to close at Rs 8,448, its highest level of the week. The buying also appears to be genuine accumulation. Delivery volumes on October 28 were about 79 percent above the 5-day average. After a sharp weekly move, though, I would not chase it. The better approach is to buy on pullbacks towards the breakout zone, which gives a far better risk-reward for the next leg up.
Do you expect Eternal to hit a fresh record high next week? Eternal has strong relative strength, and the higher-timeframe charts are bullish. The stock is now close to its all-time high of Rs 368.45. That record high is the issue in the very near term. The Rs 368–370 zone is strong resistance, and buying here for fresh upside offers an unattractive reward-to-risk. There are two better strategies.
One is to wait for a pullback and then position for longs. The other is to wait for a weekly close above Rs 368–370, which would confirm an all-time-high breakout and open the next leg.
