TCS Trading Strategy: Trading Strategy: How to trade TCS ahead of June Quarter results?


On Friday, it could register double-digit year-on-year (YoY) growth in revenue for the quarter ended June 30. Despite expectations of a strong quarterly performance, the stock has come under selling pressure of late.

The data shows that the stock has lost more than 10 per cent in the last three months. On Thursday, a day before the results, it closed with a gain of 0.8 percent.

The price pattern suggests the formation of an inverted head and shoulders pattern on the daily chart. An inverted head and shoulders pattern is a mirror image of the head and shoulders pattern and is a bullish signal.

It is defined as three bottoms with the middle plane (marked as head – H) significantly lower than the other two bottoms.
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Experts suggest that the neckline of the pattern is around Rs 3300. Hence, if the stock manages to close above the same and post the results, the rally could extend to Rs 3400-3480 in the short term.

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Nilesh Jain, Analyst – Technical & Derivatives Research, Centrum Broking said, “TCS has formed a base resembling head and shoulders pattern on the daily chart after a long consolidation.

“A breakout on top of the same will open up for Rs 3400/3480. Right shoulder support is placed at Rs 3200. We still need to wait for some confirmation to consider it a bottom formation, but some pullback may continue,” he said.

The Nifty IT index is in a downtrend and has lost nearly 30 per cent so far this year. It is also forming a lower top and bottom bottom and it needs to cross 29000 level on higher levels to reject this formation.

“Given the recent recovery from the oversold zone, we can expect this pullback to continue. Better to wait

To come up with numbers that will set the tone for the IT sector,” highlighted Jain.

“However, it would be wise to stick to quality largecap stocks like TCS.

and,” recommends Jain.

We have drawn up strategies from various experts on how traders can trade TCS before the results:

Expert: Anand James, Chief Market Strategist
Traders can preferably position the naked call or bull spread with the put. TCS has started to reverse the first half bearish trend after closing above or near the 20D SMA in a row over the past 10 days.

Since last two consecutive months, we saw short build up with TCS futures but now short covering is visible which helped it to outperform both Nifty and IT indices during the bounce from recent lows of 17th June. is of.

Thursday’s OI spectrum shows that options traders have reversed their bias and become more bullish with PEs seeing less build-up and away OTM.

Long construction detection. New additions to CE indicate a 3.5-8 per cent rise in TCS for the end of July.

Expert: Amol Athawale, Deputy Vice President – Technical Research, Kotak Securities
The short-term texture of the stock is non-directional, perhaps, traders are waiting for a breakout from both the sides.

For the bulls, Rs 3350 or the 50-day SMA would be an important breakout level to watch. And if the stock manages to trade above this then we can expect a fresh uptrend rally towards Rs 3400-3450.

On the other hand, if the stock starts trading below Rs 3200, then weakness may increase and it can take the stock to Rs 3150-3120.

Expert: Nilesh Jain, Analyst – Technical & Derivatives Research, Centrum Broking
To capture the bullish trend in TCS one can implement bull call spread strategy wherein one can buy 1 lot for Rs 3300, call can sell 1 lot for Rs 81,3400.

The total outflow from this strategy is Rs 40 and the reward is Rs 60. One can place a stop loss of Rs 15 of the total premium paid to limit the loss.

(Disclaimer: Recommendations, suggestions, views and opinions given by experts are their own. They do not represent the views of The Economic Times)


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