IT Stocks Outlook
Seen positive, may take cues from developments in US
This story was originally published at 19:01 IST on 6 December 2024
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MUMBAI - The positive momentum seen in information technology stocks in the last few weeks is expected to continue in the week ahead, according to analysts. IT stocks will continue to take cues from sector-related positive developments in the US. Additionally, the rupee's recent slide against the US dollar is likely to work in favour of some domestic IT companies, whose revenue share from clients in the world's largest economy is around 60%.
The IT sector has done relatively well in the last couple of months despite a corrective phase in the broader market. The overall trend for the IT space remains positive, and the momentum is expected to continue, said Ruchit Jain, vice-president of technical research at Motilal Oswal Financial Services Ltd. "Earlier, (mostly) the mid-cap IT stocks used to witness outperformance, but this week even some large cap stocks saw buying interest," Jain said.
IT stocks are not overheated; their prices are still below peak levels. With a new government in the US, IT spending is expected to pick up, which will boost earnings of some domestic IT companies, said an analyst at a domestic brokerage.
This week, the Nifty IT index closed 3.6% higher at 44716.05 points. All the 10 constituents of the IT index gained over the week. Persistent Systems and Tech Mahindra were among the top gainers. Compared to the IT index, both the benchmark Nifty 50 and the BSE Sensex gained 2.3% and 2.4%, respectively. Next week, support for the IT index is seen at 44363.40 and resistance at 45028.60.
"Nifty IT maintained its strong momentum, scaling new highs with broad-based buying in heavyweight stocks. The trend is expected to persist, and we hold a positive outlook for this index," said Rajesh Bhosale, technical analyst at Angel One. In the IT space, Tata Consultancy Services, Tech Mahindra and Wipro are analysts' top picks for the week ahead.
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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 |
|---|---|---|---|---|
| COFORGE LTD | 8901.45 | 2.50 | 9023.50 | 8694.60 |
| HCL TECHNOLOGIES LTD | 1922.70 | 4.00 | 1949.80 | 1901.70 |
| INFOSYS LTD | 1922.40 | 3.50 | 1949.80 | 1898.70 |
| L&T TECHNOLOGY SERVICES LTD | 5318.75 | 0.60 | 5405.60 | 5240.60 |
| LTIMINDTREE LTD | 6378.90 | 3.40 | 6437.50 | 6301.70 |
| MPHASIS LTD | 3053.95 | 2.70 | 3115.00 | 3017.90 |
| PERSISTENT SYSTEMS LTD | 6174.25 | 4.60 | 6266.70 | 6018.80 |
| TATA CONSULTANCY SERVICES LTD | 4445.50 | 4.10 | 4493.30 | 4388.80 |
| TECH MAHINDRA LTD | 1782.80 | 4.10 | 1806.50 | 1763.70 |
| WIPRO LTD | 297.35 | 2.90 | 300.50 | 294.60 |
| NIFTY IT | 44716.05 | 3.60 | 45028.60 | 44363.40 |
| NIFTY 50 | 24677.80 | 2.30 | 24813.70 | 24552.60 |
| BSE SENSEX | 81709.12 | 2.40 | 82133.50 | 81294.00 |
End
Reported by Darshan Nakhwa
Edited by Avishek Dutta
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