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The stock of Tech Mahindra (₹1,123.55) has been in a strong downtrend since the beginning of this year. However, the fall could be coming close to its bottom. Strong supports are at ₹981 – the 61.8 per cent Fibonacci retracement level and at ₹950 – a resistance-turned-support trendline. The chances are high for the stock to reverse higher and begin a fresh leg of rally targeting ₹1,900-₹1,950. Long-term investors can start buying at current levels itself and accumulate as the price falls to ₹980-₹950 in the coming weeks. Buy 25 per cent of the intended amount at current levels.
Accumulate another 50 per cent at ₹985 and the balance 25 per cent at ₹960. So, the average purchase price will be at ₹1,013.38. Keep a stop-loss at ₹720. Move the stop-loss up to ₹930 as soon as the stock reaches ₹1,300. Trail the stop-loss up to ₹1,420 as soon as the stock touches ₹1,750 on the upside. Book profits at ₹1,900. In case if the stock breaks below ₹950, the fall can extend up to ₹800. In that case the reversal and the rally to ₹1,900-1,950 will get delayed.
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