We recommend a buy in Hexaware Technologies from a short-term perspective. It is apparent from the charts of the stock that after registering a multi-year high at Rs 142 in mid-September 2012, the stock peaked out. Since then, the stock has been in a medium-term downtrend. While trending down, the stock decisively breached its key supports at Rs 110 and Rs 100 in November and December respectively. However, the stock's significant support at Rs 85 arrested the decline in late December.
Triggered by positive divergence in daily relative strength index and cushioned by support area, the stock reversed direction and started moving higher. After breaching the 21-day moving average the stock emphatically broke through its immediate resistance at Rs 90 by gaining 4 per cent on Tuesday. Near-term trend for the stock is up. We notice that there is an increase in daily volume over past three trading sessions. The daily RSI is moving higher in the neutral region towards the bullish zone and weekly RSI has entered the neutral region from the bearish zone. The daily moving average convergence divergence indicator has signalled a buy and is moving higher in line with the stock price.
Further, the daily price rate of change indicator is featuring in the positive area implying buying interest. Taking a contrarian view on the stock, we are bullish on it from short-term perspective. We expect its rally to prolong and reach our price target of Rs 97 or Rs 99 in the approaching trading sessions. Traders with short-term perspective can consider buying the stock with stop-loss at Rs 91.5.