Sonata Software shares dive over 15% today; key technical levels to watch out for

Shares of Sonata Software Ltd recorded a sharp fall in Wednesday's trading session. The stock cracked 15.45 per cent to hit a day low of Rs 538.90 against its previous close of Rs 637.40. It was last seen trading 13.71 per cent lower at Rs 550.

Today's downward move in the share price came after the global IT services and tech solutions firm reported a 3 per cent year-on-year (YoY) drop in its net profit for the March 2024 quarter, at Rs 110.4 crore, from Rs 113.8 crore in the year-ago period.

Revenue from operations, however, rose 14.53 per cent to Rs 2,191.6 crore in Q4 FY24 compared to Rs 1,913.5 crore in the corresponding period last year. The company's Board has also recommended a final dividend of Rs 4.40 per equity share for FY24. 

On technical setup, support on the counter could be seen at Rs 535, followed by Rs 518 and Rs 500 levels. And, resistance may be found between the Rs 560-570 zone.

Ravi Singh, Senior Vice-President (Retail Research) at Religare Broking, said, "Sonata Software is looking weak on daily charts. It can slip towards Rs 500 level in the near term. Resistance will be at Rs 560."

AR Ramachandran from Tips2trades said, "Sonata Software looks bearish but also oversold on daily charts with strong resistance at Rs 569. A daily close above this resistance could lead to target of Rs 705 in the near term. Next support will be at Rs 518."

Jigar S Patel, Senior Manager - Technical Research Analyst at Anand Rathi Shares and Stock Brokers, said, "Support will be at Rs 535 and resistance at Rs 566. A decisive close above Rs 566 level may trigger a further upside till Rs 630. The expected trading range will be between Rs 515 and Rs 630 for a month."

The counter was trading lower than the 5-day, 10-, 20-, 30-, 50-, 100-, 150-day and 200-day simple moving averages (SMAs). The stock's 14-day relative strength index (RSI) came at 47.97. A level below 30 is defined as oversold while a value above 70 is considered overbought.

The company's stock has a price-to-equity (P/E) ratio of 42.87 against a price-to-book (P/B) value of 21.76. Earnings per share (EPS) stood at 12.79 with a return on equity of 50.77.

As of March 2024, promoters held a 28.17 per cent stake in the company.