Is the super bullishness of HCL Infosystems a 'worry' for traders?

The stock has almost doubled in a matter of two weeks, and it continues to scale new highs. 

HCL Infosystems Limited is a distribution and information technology services and solutions company. The Company operates through the segments, including Hardware Products and Solutions, Services, Distribution and Learning. It is a small cap company with a market cap of Rs 630 crore. The fundamentals of the company are in a bad shape as it has reported a loss for the fourth consecutive year. However, the company management believes that they can turn the fortune of the company and make a strong comeback.

The majority stake is with the promoters which is about 62.89%, while the retail portion holds the rest of the stake. Interestingly, there are no pledged promoter holdings.

Recently, the stock was in limelight due to its significant price move. The exchange had asked to provide clarification on such a change in their stock price. The stock is currently under the ASM list. The company has provided clarification with a positive response and assured that it does not hold any price sensitive information and it adheres to rules and regulations put down by the SEBI.

The stock has almost doubled in a matter of two weeks, and it continues to scale new highs. The stock trades above all its key moving averages. An important point to note is that the stock has been hitting the upper circuit in the last five days. Huge volumes have been recorded in the last two weeks. The RSI has shot up to 88 and is in the overbought zone. The ADX indicator is rising which shows a strong uptrend. All the technical parameters indicate the super bullishness of HCL Infosystems.

Having said that, it is advisable to trade cautiously, especially in such stocks that are under the ASM list. While a stock hitting upper circuits continuously is a good sign for an investor, the inverse is also true as the investor will not be having the chance to get out of the stock. We advise the traders to trade with utmost caution in HCL Infosystems Limited.