HCL Double Bottom Breakout: Stock Rallies 4%, ‘Confirms’ Uptrend!

Today was probably the best session for the bulls in a long time as the Nifty 50 index opened the session with a massive gap up, currently trading 1.54% up at 17,276, by 10:55 AM IST. All sectoral indices are trading in deep green and it is rare to see such a strength. The US CPI data on Thursday which came out at 8.2%, compared to the estimate of 8.1%, initially jittered global markets for some time. However, by the time the US session closed, the US markets rallied significantly from the day's low which primarily fueled the ongoing bullish move in our markets.

With the tech-heavy Nasdaq 100 index soaring 2.3% to 11,033.58, a rally in the Indian IT space was almost a no-brainer. In fact, the Nifty IT index is the top-performing sectoral index for the day, gaining 2.93% to 28,310. One IT stock that is looking extremely good on the daily charts, much better than its peers is HCL Technologies (NS: HCLT ) Limited. The company has a market capitalization of INR 2,65,888 crores and is providing a range of software development, business process outsourcing and information technology infrastructure services.

HCL Technologies shares have been making a double bottom chart pattern on the daily time frame which is a bullish reversal pattern and signals a change from a prior downtrend to an uptrend. The share price of HCL Technologies delivered a stellar rally in the previous session on account of better-than-expected Q2 FY23 results. Yesterday’s 3.16% rally to INR 982.1 was faced with the resistance of this double bottom, at around INR 985 hence, the breakout was yet to be confirmed.

But today, as the stock made a second consecutive gap-up opening, gaining 3.61% to INR 1017.9, it surged past that resistance level in the blink of an eye and completed the pattern breakout. The completion of this pattern has finally given a signal of bulls getting in control of the trend. According to the height of the pattern, the stock could easily rally to around INR 1,090 - 1,100. There is a bit of resistance around INR 1,080 which could be troublesome for the stock, hence this level should be watched carefully. 

The breakout seems reliable, as the total volume for the week so far which accounted for over 6% rally, is around 23.15 million shares, which is the highest weekly volume since mid-July 2022. The support of the double bottom pattern which is INR 877 is the level below which the uptrend would again change to a downtrend.