The stock market participants seem to be happy with the June quarter earnings of the IT major – Infosys Technologies. This was reflected in the 12% gain in the stock price on Friday. Let’s have a look at the technical picture. Kindly direct your attention to the weekly chart of Infosys featured below.
It is evident that the stock has been confined to the Rs.2,170 – 3,000 range for over two years. There is a huge unfilled gap at Rs.2,915 on April 11. This gap is likely to act as an immediate resistance. Just above this, the stock has the upper end of the trading range of Rs.3,000 to contend with.
While the rally on Friday was impressive, we sense that this provides and opportunity to scale down exposures in Infosys. Unless the the major resistance at Rs.3,000 is cleared, we could see the stock stuck in this broad trading range of Rs.2,170-3,000.
Along with the red down-sloping trendline highlighted in the chart above, the centreline of the blue pitchfork is another barrier for the stock to contend with.
Given this backdrop, we would suggest profit-taking / reducing exposures. Fresh buying may be considered near the lower end of the trading range or after the breakout past the Rs.3,000-level.
(The view mentioned here is based on Technical Analysis of historical stock price action. Please read the Disclaimer)