Chart Check: Info Edge back above 200-DMA on daily charts; near term target seen at Rs 4,400

The stock hit a 52-week high of Rs 4,624 on 26th August 2022 but failed to hold on to the momentum. The stock closed at Rs 3,890 on 22nd May 2023 which translates into a downside of 16%.

Earlier in May, the stock gave a breakout from a head & shoulder pattern (placed at Rs 3,580), but it failed to keep the momentum going and witnessed some resistance around the upper trendline of the descending triangle pattern.

The stock witnessed some profit booking but found support above the 50-DMA on the daily charts in May 2023.

The bounce back from the short-term moving average also helped the stock to climb above the 200-DMA placed at Rs 3,880 on 22 May 2023. The stock closed at Rs 3,890 on 22nd May.

The stock is up more than 8% in a month and over 12% in the last 3 months. It is trading above short-term moving averages such as 5,10,20 and 30-DMA on the daily charts.

The breakout level from a Head & Shoulder pattern of Rs 3,580 will now become an important support. A break below this level could reverse the trend, if not, bulls could remain in control, suggest experts.Short term traders can look to buy the stock now or on marginal dips for a target above Rs 4,000 levels in the short to medium term, they say.

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“Info Edge was one of the best outperformers within the IT-platform sector from 2017 to 2021. It has generated over 8x returns during the same time period and the stock price went from Rs 800 odd to an all-time high of Rs 7,465. However, we all know that the IT sector is struggling and underperforming for more than a year,” Kiran Jani CIRA, Head of Technical Research at Jainam Broking, said.

Post registering all-time high of around Rs 7,450, stock prices corrected 55% and mode bottomed near Rs 3,300. The stock recorded multiple bottoms of Rs 3,300 in May 2022 and Feb 2023.

“Since Feb 2023 we are seeing prices have started moving up in a higher top/higher bottom pattern and registered a 21% gain in two months. At the current juncture, we can see a bullish price pattern breakout with volume visible on the chart,” he said.

“The price has formed a big descending triangle. And within that triangle, we are seeing trading above its 100-SMA after a long time. It has formed an inverted head and shoulder. The breakout from head and shoulder came above 3850. Recently after the breakout, we can see prices facing the resistance of the falling trend line,” highlighted Jani.

“Relative strength index (RSI-14) shows the multiple bullish divergences. Based on volumes and the RSI divergence we are expecting a sharp upside. Considering the current chart pattern we are expecting prices to touch Rs 4,400 if prices hold Rs 3,580 levels,” he recommends.

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