IT Stocks Surge Potential: Tata Elxsi, LTTS Eye 30% Gain on Q3 Outlook

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AuthorRiya Kapoor|Published at:
IT Stocks Surge Potential: Tata Elxsi, LTTS Eye 30% Gain on Q3 Outlook
Overview

India's Nifty IT index is poised for potential gains as major companies prepare to announce Q3 earnings. Analysts highlight a critical resistance level for the index, with a breakout signaling a rally. Tata Elxsi and L&T Technology Services are singled out as strong buy-on-dips candidates, with analysts projecting significant upside, up to 30% for Tata Elxsi.

Q3 Earnings Season Approaches

The Nifty IT index is navigating a critical juncture as major technology firms gear up to report their third-quarter earnings. The sector, which has held onto a modest 0.6% gain in January amidst market volatility, faces a key resistance level that analysts believe could trigger a substantial rally.
The earnings season kicks off next week with announcements from industry heavyweights Tata Consultancy Services (TCS) and HCL Technologies on January 12. Tata Elxsi follows on January 13, with Infosys reporting on January 14, L&T Technology Services (LTTS) on January 15, and Wipro on January 16. These results are anticipated to dictate the near-term direction of the Nifty IT index.

Nifty IT Index at a Crossroads

Kunal Shah, Senior Technical Analyst at Mirae Asset ShareKhan, notes the Nifty IT index is currently trading around 38,150. The index is encountering strong resistance near the 38,500 mark. This level is crucial, representing a 50% Fibonacci retracement of a significant prior decline.
Shah explains the IT index has been trading within a broad range of 36,000 to 38,500. A decisive breach above 38,500 is expected to ignite a strong trending move, breaking free from recent choppy action. Such a breakout could propel the index towards 43,000, signaling a potential upside of approximately 12.7% from current levels.

Top Picks: Tata Elxsi and LTTS

Among individual stocks, Shah identifies Tata Elxsi and LTTS as prime buy-on-dips opportunities. Tata Elxsi, currently priced at ₹5,785, is interpreted through Elliott Wave theory as having completed Wave 4 and entered Wave 5, a typically strong momentum phase.
The stock shows robust support between ₹5,500 and ₹5,300. A convincing break above the immediate ₹6,000 hurdle could unlock potential upside towards the ₹7,500 zone, implying a substantial 29.7% gain from its present market price.
L&T Technology Services (LTTS), trading near ₹4,410, is situated in a critical demand zone around ₹4,200. Analysts see immediate resistance at ₹4,725. A decisive breakout above this point could trigger short-covering and attract fresh buying, potentially driving LTTS towards the ₹5,150–₹5,200 resistance area. This suggests an approximate 17.9% upside from current levels. Shah advises a strict stop-loss near ₹4,000 for LTTS.

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