TechM, Coforge, Tata Tech: 3 IT stocks that can deliver strong returns in short term

Tech Mahindra Ltd (TechM), Coforge Ltd and Tata Technologies Ltd are three IT stocks that look good on technical charts and could deliver strong returns in the short term, said Kkunal V Parar, Vice-President of Technical Research and Algo, Choice Broking. The analyst sees potential for Tata Tech stocks to reach Rs 1,115-1,200 levels; he sees TechM shares visiting Rs 1,705-1,800 range and Coforge touching Rs 6,850-7,000 levels in the coming days.

Tata Technologies
Parar of Choice Broking said Tata Tech has recently crossed above its 100-day moving average, which indicate a potential shift from a bearish phase to a bullish one. This moving average, now flattening, suggests that the previous downward momentum may be weakening, Parar said.

The Relative Strength Index (RSI) is above 50, indicating bullish strength. This upward movement in the RSI, alongside the price moving above the 100-day moving average, supports the idea of a developing uptrend.

“Since the RSI is not yet in the overbought zone, there might still be room for further price increases before any significant pullback occurs.The stock’s past year shows a decline followed by a sideways movement, but the recent breakout signals a possible bullish reversal. The support is strong around Rs 970,” Parar said.

The analysts said traders could consider entering the stock with a strict stop loss at Rs 970. On the upside, the stock has the potential to reach Rs 1,115-1,200 levels, offering a promising risk-reward scenario, he said.

Tech Mahindra
Tech Mahindra is currently demonstrating a strong bullish trend, visible across both its daily and weekly charts. On the daily chart, the stock is trading at Rs 1,656.90, moving within a well-defined upward channel that indicates consistent bullish momentum. The stock has been steadily climbing, supported by the 50-days moving average, which has also been trending upwards. The Relative Strength Index (RSI) on the daily chart is approaching the 70 level, suggesting that the stock may be nearing overbought territory.

“However, as long as the stock remains within its ascending channel, the bullish momentum is likely to continue,” Parar said.

On the weekly chart, the long-term trend further validates the bullish sentiment seen in the daily timeframe, he said. The TechM stock has been in a sustained uptrend, trading above the upper band of a broadening rising wedge formation. The 100-week moving average provides additional support, indicating strong underlying strength.

“In summary, Tech Mahindra is exhibiting strong bullish behavior across both daily and weekly time frames. The stock is well-supported by its moving averages in both time frames. Given the analysis, one could consider entering the stock with a strict stop loss at Rs 1,590. On the upside, the stock has the potential to reach between Rs 1,705 and Rs 1,800, offering a promising risk-reward scenario,” Choice Broking said.

Coforge
Coforge was trading within a descending triangle pattern from January 2024 until mid-August 2024 on the daily chart. Recently, it broke out above the upper trendline of the triangle, indicating potential bullish momentum.

The stock has crossed above its 50-day moving average, which further supports a positive outlook, Parar said.

“The Relative Strength Index (RSI) appears to be around the 50 level, suggesting neutral momentum at the moment, but a move above 50 could signal increasing bullish momentum. Overall, Coforge seems to be entering a bullish phase, particularly after the breakout and the move above the 50-day moving average, given the analysis, one could consider entering the stock with a strict stop loss at Rs 5,980. On the upside, the stock has the potential to reach between Rs 6,850 and Rs 7,000, offering a promising risk-reward scenario,” it said.