Navigating the Infosys Stock: When to Hold or Sell

The decision to hold or sell Infosys (INFY) stock can be as nuanced as the technical indicators in play. If your purchase price was above 1650 and the stock fell below this level, the optimal time to have sold would have been when the loss reached 10%. If you missed that opportune moment, your next target should be to hold the stock until it hits 1400. However, if it falls below 1400, it's advisable to exit the position.

My Perspective and Strategy

Based on my analysis, the optimal time to buy Infosys today would be on May 23, 2022, at closing price (CMP) of 1480. This would help in lowering the average purchase price. The rationale behind this recommendation lies in the current technical indicators that suggest a rebound is imminent.

Technical Analysis:

Incoming Bounce: Infosys, which recently dropped by nearly 15% from 1750 within 30 days, is now poised to move back up. The stock is forming higher lows, and RSI shows divergence, indicating potential upward momentum. Breakout: There was an inside bar breakout indicated by a bullish Harami candle, signaling a possible inverse head and shoulders pattern formation. Gaps: An unfilled gap around 1735 is expected to be closed in the near future, which could indicate trend succession. Support Levels: If the stock closes above 1484 today, it is expected to move higher in the next 2-3 weeks.

It is important to note, however, that crossing the 52-week high is highly unlikely; this recent rise is more indicative of a temporary bounce after a significant correction.

Current Technical Chart Analysis

As per the current technical chart with daily candles, Infosys is under a noteworthy correction following the formation of a double top. Despite the bought price being close to the interim peak, it is crucial to wait for the stock to exhibit sustained higher levels before anticipating a reversal from the current bearish trend to a bullish trend. A recovery above the 52-week high would be expected to confirm a long-term uptrend.

There is also a risk that the stock could experience further downward correction if it fails to gather sufficient buying momentum at the current low, which could push the price to 1350-1250 levels. Therefore, it is essential to monitor the stock's performance and wait for a sufficient rebound before considering additional purchases.

For Long-Term Investors

For long-term investors who chose to purchase IMS near the 52-week high, the general advice is to hold and wait for a potential recovery in the next 1-2 years. However, fresh investments should be avoided as there is a risk that it may take a longer period for the stock to recover.

In conclusion, the decision to hold or sell Infosys stock should be based on a comprehensive analysis of the current market situation and future expectations. By following these guidelines and using technical analysis as a tool, investors can make more informed decisions and optimize their returns.