Despite recent volatility, market expert Vishnu Kant Upadhyay suggests that traders holding positions in midcap IT stocks like KPIT Technologies Ltd and Firstsource Solutions Ltd should consider holding rather than exiting. Upadhyay, AVP Research Advisory for Technicals and Derivatives at Master Capital Services, points to improving sentiment across the technology sector as a key factor supporting a potential recovery for these battered stocks.
KPIT Tech: Averaging Recommended, Exit Not Yet
For KPIT Technologies, Upadhyay noted that the stock's recent weakness should be viewed within the context of a broader revival in the IT sector, particularly among midcap companies. He emphasized that current levels are not ideal for exiting the market and highlighted that KPIT Tech has recently regained its 21-day exponential moving average.
Traders might consider averaging their positions at current levels. Upadhyay identified the Rs 750-790 range as a potential zone for profit-booking. He advised maintaining a stop-loss order below Rs 540 to manage risk on existing positions.
Firstsource Solutions Signals Reversal
Upadhyay shared a similar positive outlook for Firstsource Solutions, even for those traders currently facing an 18 percent loss. He pointed to the stock forming an 'Inverse Head and Shoulder' pattern, a bullish reversal formation commonly tracked in technical analysis.
While acknowledging that the 200-day exponential moving average presents a significant resistance level, Upadhyay believes that the current momentum from lower price points suggests this barrier could soon be overcome. He set upside targets for Firstsource Solutions at Rs 320 and Rs 340, recommending a stop-loss below Rs 246.
Broader IT Sector Tailwinds
The expert's optimistic view extends beyond individual stocks, bolstered by a strengthening broader IT sector. The Nifty IT index has shown leadership in the market, with several midcap technology companies experiencing sharp gains. This sector-wide momentum, according to Upadhyay, creates a supportive environment for beaten-down counters attempting to rebound.
The recovery call for KPIT Tech and Firstsource is therefore also a reflection of improving risk appetite for technology stocks. After a challenging period, traders appear to be rewarding companies where chart patterns are stabilizing and selling pressure is easing.
Disclaimer: This information is provided for educational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.