Stock Watch: TCS to rebound from current levels?

TCS trading near its crucial support level indicating some action in time to come.

On October 8, 2021, Tata Consultancy Services Ltd. (TCS) reported its Q2 FY22 earnings and posted a good set of numbers. The revenue from operations of TCS showed 17 per cent growth to Rs 46,867 crore in the recent quarter as against Rs 40,135 crore in Q2 FY21. Whereas, over the same quarter last year, the revenue growth in constant currency was around 15 per cent.  

For the September quarter of FY22, TCS net profit surged about 29 per cent to Rs 9,624 crore to Rs 7,475 crore (Q2 FY21) on a consolidated basis. Moreover, the board has also approved a second interim dividend of Rs 7.  

Despite stellar numbers, the stock closed above its resistance level of 3,990 and continued its southward journey. The level of 3,403 is acting as good support. Moreover, this support is at an important Fibonacci level of 23.6 per cent. But if in case the stock fails to sustain above this level, the further fall might be evident to around 3,130-3,050 levels. However, on the upside, three major resistances at 3,707, 3,945 and 3,990 levels would be restricting its up move.

Above is the weekly chart of Tata Consultancy Services Ltd.

If we look at Relative Strength Index (RSI), then it is taking support at current levels of 51 on weekly basis, while it is placed quite below its 20-Week Exponential Moving Average (EMA). On weekly basis, Moving Average Convergence Divergence (MACD) despite being in the positive territory, is depicting negative crossover.  

Therefore, at current levels, one should stay put and watch out for crucial support and resistance levels for further decisions. At the time of writing, TCS was trading at 3,478 levels.