What should investors do with TCS, Infosys & HCL Tech ahead of December quarter results?

"Investor pessimism about the US economy with rising inflation and recession fears has led to the slide in the Indian Technologies companies last week," says Vaishali Parekh, Vice President - Technical Research, Prabhudas Lilladher Pvt. Ltd.

In an interview with ETMarkets.com, Parekh who has over 16 years of experience said: “TCS has been in consolidation for quite some time and has the near-term support zone of 3150 levels and a decisive breach below can weaken the trend to anticipate for further slide” Edited excerpts:

The first week of January started off on a negative note. What led to the price action?
The year began with negative cues from global markets with stocks giving up their gains, as concerns such as rising rates and high inflation led to gradual erosion.

The index made a series of lower top formations on the daily chart in the last month. The view remains bearish below the 17800 zone.

Do you see the weakness continuing in the second week as well? What are the important levels that one should track for Nifty and Nifty bank?
As said earlier, the Nifty50 index has been showing lower top formation patterns on the daily chart since the last one month which suggests a bearish biased view and with the onset of result season, one can anticipate for fluctuations and swings this month.

Currently, the 17780-17800 levels would be crucial which if decisively broken can trigger for fresh sell-off, with next downside targets visible near the 17500 and 17250 (200-DMA levels) zone.

Any particular strategy that traders can deploy on Nifty ahead of Budget?
One can go for hedging their portfolios with derivative instruments like future and options during the volatile sessions of January like short strangle or also can initiate long naked option contracts for safeguarding their portfolios.

Infra, as well as the industrials Index, rose more than a percent – are we seeing a pre-Budget rally?
Yes, we can expect a further spurt in some of the select sectors like Infra, Power, PSU Banks, and Fertiliser stocks in the coming days with expectations of positive announcement from the Budget session.

Utilities and IT fell more than 1% -- what led to the price action?
Investors' pessimism about the US economy with rising inflation and recession fears has led to the slide in the Indian Technologies companies and the previous entire year IT has been underperforming with most of the stocks down by 25% to 30% from their peak levels.

IT companies will be declaring results in the coming week. How should one play TCS ahead of results on Monday, Infosys, and HCL Tech on Thursday?
TCS has been in consolidation for quite some time and has the near-term support zone of 3150 levels and a decisive breach below can weaken the trend to anticipate for further slide.

At the same time, a decisive breakthrough above 3350 can improve the bias and can trigger for fresh upward move.

Infosys already has lost steam and with a weak bias has further scope for the downward journey with a major support zone near 1360 levels. Only a decisive move past the 1535 levels would improve the bias and expect a further upward move.

HCL Tech also is witnessing a consolidation phase with a narrow range movement for quite some time and a move past the 1055 zone would bring some improvement for further rise anticipated at the same time a breach below the 1010 zone would weaken the trend and can invite for further slide.

Any 2-3 trading ideas for the next 3-4 weeks?
One can Buy stocks like GNFC, Coromandel Intl, Irb Infra, REC Ltd, M&M, Escorts, and Cummins at current levels which can yield decent returns in the next 3-4 weeks

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