IT Stocks Outlook
Seen rangebound next wk on mixed sentiment
This story was originally published at 22:00 IST on 6 September 2024
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MUMBAI - Shares of information technology companies are expected to be rangebound next week due to divergent views among investors. Some investors remain upbeat about the sector on expectations of a rate cut from the US Federal Reserve, which could help revive demand for IT services. Others see weak manufacturing and jobs data announcements from the US this week as a negative for the sector.
The worst may be behind for IT stocks, and a rate cut by the Federal Reserve could benefit the sector by easing financial conditions and improving client spending, said an analyst at a domestic brokerage. After a challenging period marked by global uncertainties, inflation, and reduced budgets, signs of stabilisation are emerging, the analyst said. The Nifty IT index had closed higher for three consecutive weeks till Aug 30.
This week, the Nifty IT index ended 1.3% lower at 42228.90 points on renewed fears of a likely slowdown in the US. The US is a key market for Indian IT companies, which earn a significant part of their revenue from the region. Of the 10 constituents of the information technology index, six ended lower and the remaining gained on a week-on-week basis. While Coforge was the top gainer, Wipro was the top loser.
"Nifty IT ended its weekly winning streak, forming a red candle on the weekly chart. In the coming week, the correction may continue, but this space is expected to outperform. Any dip towards the 41,000 level could be a buying opportunity, while 43,300-43,500 acts as immediate resistance," said Rajesh Bhosale, technical analyst at Angel One.
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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 | 1756.10 | 0.20 | 1819.70 | 1708.30 |
| Infosys | 1901.85 | (-)2.20 | 1951.40 | 1872.10 |
| L&T Technology Services | 5622.05 | (-)1.70 | 5850.90 | 5486.80 |
| LTIMindtree | 6165.40 | 0.20 | 6381.10 | 6039.10 |
| Persistent Systems | 5189.95 | 0.40 | 5391.10 | 5074.10 |
| Tata Consultancy Services | 4456.75 | (-)2.10 | 4550.90 | 4393.00 |
| Tech Mahindra | 1623.25 | (-)0.80 | 1666.70 | 1592.20 |
| Wipro | 520.60 | (-)3.30 | 534.40 | 511.50 |
| Nifty IT | 42228.90 | (-)1.30 | 43276.30 | 41643.40 |
| Nifty 50 | 24852.15 | (-)1.50 | 25308.20 | 24573.30 |
| S&P BSE Sensex | 81183.93 | (-)1.40 | 82746.40 | 80200.70 |
End
Reported by Darshan Nakhwa
Edited by Tanima Banerjee
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