Kaynes Technologies’ sharp 43% slide from its October peak, capped by a steep 12.5% drop on Friday, has raised questions about whether the stock is approaching a reversal zone or slipping into deeper losses. While momentum indicators remain firmly bearish, its stretched gap from the 200-day moving average suggests potential mean-reversion opportunities for tactical investors.

Edited excerpts from a chat with Anand James, Chief Market Strategist, Geojit Investments Limited:

After a flat week, how would you trade the market now? Would Friday’s RBI optimism carry forward on Monday as well? Friday’s optimism stemmed from the completion of a morning star pattern, signaling a potential reversal from the downtrend that began on December 1. However, while the downswing was brief, the reversal is also likely to be short-lived, as evidenced by Friday’s stall at 26,200, a key congestion resistance.

Although oscillators support a possible uptrend extension, we do not see sufficient momentum for a strong move higher. We favor a swing lower toward 26,085–26,065 initially. Alternatively, a breakout above 26,200 could trigger further gains toward 26,460–26,550, but a sharp vertical rise is less likely.

IT was among the major gainers in the week. Do you see chances of more upside?

Yes, the IT sector shows strong potential for further upside. Nifty IT has been signaling a reversal since September and recently broke above the weekly supertrend, indicating strength. The weekly RSI near 60, along with the index closing above its 20-week high, reinforces the positive outlook. Based on these technical cues, the index could target 39,500 in the coming weeks.
Derivative data also supports this bullish view. Over 50% of constituent stocks saw short additions in near OTM put strikes and long additions in call strikes. Additionally, 70% of stocks experienced long build-up on Friday, while 80% recorded weekly short covering, suggesting traders are positioning for further gains. Heavyweights like TCS, Infosys, HCL Tech, Wipro, and Tech Mahindra show strong weekly charts and are expected to lead the rally toward 39,500.PSU banks were under selling pressure but recovered on Friday. Does the chart indicate a fresh 52-week high again going forward?

Even though the index saw a pullback on Friday, the charts suggest a mixed outlook. The wedge pattern breakout in September and the resulting upside has been losing momentum since November. The recent breakdown below the rising trendline near 8,500 indicates a possible short-term trend shift, while the weekly MACD shows exhaustion candles, signaling early signs of consolidation. Despite this, longer-term charts still reflect underlying strength, keeping the possibility of a fresh 52-week high alive.

Derivatives data shows some recovery attempts on Friday, with long additions and short covering in stock futures, but weekly data indicates that more than half of the positions still involved short additions. Among individual stocks, SBI, Bank of Baroda, PNB, Union Bank, Canara Bank, and Indian Bank may see a quick pullback early next week, though sustainability remains uncertain. The preferred strategy is to capitalize on any early upside next week while remaining cautious in the latter half.

Kaynes ended the week down 21% amid negative reports. Do you see chances of an upside bounce or is it too risky to chase the falling knife?

Kaynes has now fallen 43.5% from its October peak, with Friday’s 12.5% decline marking the steepest single-day drop during this period. Momentum indicators and oscillators point to a strong downward trend with no signs of bearish exhaustion, raising the risk that the slide could extend to at least the year’s low of Rs 3,825 seen in February. That said, the severity of Friday’s fall suggests that fear may have peaked.

Adding to this view, the only previous occasion the stock had stretched so far from its 200-day moving average was in April, when the gap was around 25%. Currently, the stock is nearly 26% away from the 200-day SMA, prompting close monitoring for potential mean-reversion moves in the coming week. Given the contrarian nature of this view, the downside marker is advised slightly below Rs 4,300, with Rs 4,541 as the initial recovery target.

Give us your top ideas for the week ahead.

COFORGE (CMP: 1977)

View: Buy

Target: 2080-2180

SL: 1882

The stock has been in a steady uptrend since 2020 and is currently forming a Cup and Handle pattern on the charts. It is attempting a breakout from this formation, supported by a weekly RSI near 60 and a MACD above the signal line. The price action remains strong, trading well above the 20-, 50-, and 100-day moving averages, reinforcing the bullish outlook. The stock is expected to move toward Rs 2,080 and Rs 2,180 in the near term. Long positions should be protected with a stop-loss placed below Rs 1,882.

ABCAPITAL (CMP: 358)

View: Buy

Target: 368-377

SL: 348

The stock has maintained a strong uptrend since February 2025 and continues to show strength on both daily and weekly charts. The weekly MACD remains above the signal line, and the price is trading comfortably above the 20-, 50-, and 100-day moving averages, reinforcing the bullish outlook. The stock is expected to move toward Rs 368 and Rs 377 in the near term. All long positions should be protected with a stop-loss placed below Rs 348.