IT Stocks Outlook
Gains seen muted next wk as valuations expensive
This story was originally published at 23:22 IST on 26 July 2024
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MUMBAI - Gains in shares of information technology companies are seen muted next week due to expensive valuations following a sharp rise in the past two months. Overall sentiment around the sector is positive as recent quarterly earnings have bolstered analysts' view that the worst may be behind for the sector, but concerns remain over valuations.
Valuations of IT stocks are stretched and not sustainable, said Rahul Jain, vice president-research at Dolat Capital. These concerns have risen after sharp gains in most large cap stocks in the sector. The Nifty IT index has risen over 13% in the last two months. This week the index rose 2.6%.
The next major event for the sector is the US Federal Reserve's policy meeting in September, where market participants expect at least one cut of 25 basis point in key interest rates. Lower rates are expected help improve demand for IT services in the US and boost earnings of Indian companies.
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Following are the resistance and support levels for the sector's key stocks for next week, as per calculations based on their prices on the National Stock Exchange:
| Company | Price | Week-on-week change in % | Resistance | Support |
| HCL Technologies | 1635.35 | 2.60 | 1669.10 | 1577.10 |
| Infosys | 1878.90 | 4.80 | 1920.10 | 1804.80 |
| L&T Technology Services | 5214.05 | 6.80 | 5266.30 | 5141.40 |
| LTIMindtree | 5788.45 | 0.50 | 5955.30 | 5501.60 |
| Persistent Systems | 4772.95 | 4.10 | 4888.30 | 4662.30 |
| Tata Consultancy Services | 4387.85 | 2.00 | 4467.90 | 4297.10 |
| Tech Mahindra | 1541.15 | 3.30 | 1610.40 | 1409.60 |
| Wipro | 524.80 | (-)5.80 | 540.70 | 500.60 |
| Nifty IT | 40977.35 | 2.60 | 41702.70 | 39719.20 |
| Nifty 50 | 24834.85 | 1.20 | 25152.60 | 24252.10 |
| S&P BSE Sensex | 81332.72 | 0.90 | 82338.10 | 79510.90 |
End
Reported by Anshul Choudhary
Edited by Ashish Shirke
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