SONATSOFTW - Swing Trade Analysis

Last Updated Time : 02 Aug 25, 12:58 am

Swing Trade Rating: 2.7

📊 Analysis Summary

SONATSOFTW (Sonata Software) shows strong fundamentals but is currently in a technical downtrend with weak momentum indicators. The stock is trading below both its 50 DMA and 200 DMA, and RSI is low, suggesting bearish sentiment. While not ideal for swing trading right now, it may become attractive if it stabilizes near support.

✅ Strengths

High ROCE (29.1%) and ROE (27.3%): Excellent capital efficiency.

EPS of ₹15.1: Strong earnings base.

Dividend Yield (1.08%): Decent for a tech stock.

MACD Positive (1.20): Early signs of momentum reversal.

Volume Above Average: Slight uptick in trading interest.

⚠️ Weaknesses

RSI at 40.0: Weak momentum, close to oversold.

Trading Below 50 DMA (₹415) and 200 DMA (₹466): Downtrend confirmed.

FII & DII Selling: -1.08% and -0.30% — institutional exit.

PEG Ratio (6.54): Extremely overvalued relative to growth.

Quarterly Profit Decline (-2.56%): Minor earnings contraction.

Debt-to-Equity (0.30): Higher than ideal for a tech firm.

52w Index at 25.5%: Far below yearly high — weak relative strength.

📈 Optimal Entry Price

Buy Zone: ₹390–₹400 Near recent support and psychological round number — wait for RSI to stabilize or MACD to strengthen.

📉 Exit Strategy (If Already Holding)

Target Exit: ₹430–₹445 Near 50 DMA and short-term resistance zone.

Stop Loss: ₹385 Below recent support — exit if bearish momentum resumes.

🧠 Final Thoughts

Sonata Software is not currently ideal for swing trading due to weak technicals and institutional selling. However, its strong fundamentals make it worth watching for a reversal setup. Conservative traders should wait for RSI to cross 45 and price to reclaim the 50 DMA before entering.

Want to explore other mid-cap IT stocks with stronger momentum?

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