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Informist, Friday, Dec 27, 2024

MUMBAI – Shares of information technology companies are expected to trade in a narrow range next week as some investors are expected to take out profits before the commencement of the Oct-Dec earnings announcements, while others are likely to deploy a buy-on-dips strategy, according to analysts.

This week, the Nifty IT index closed 0.1% lower at 43721.40 points. By comparison, the benchmark Nifty 50 and BSE Sensex closed 1% and 0.8% higher, respectively. Of the 10 constituents of the IT index, six declined over the week, while the rest gained. L&T Technology Services and LTIMindtree were among the worst performers. Tech Mahindra and Wipro were among the top gainers. Next week, support for the IT index is seen at 43392 and resistance at 44028 points.

"After a good run over the last one and a half months, the Nifty IT is now witnessing some profit booking. This is an indication that there could be some cooling off in IT space before the stocks resume their uptrend," said Ruchit Jain, vice-president of technical research at Motilal Oswal Financial Services Ltd. "The depreciation in the rupee is seen as a good sign for the IT companies, which could provide some support. We have advised clients not to take an aggressive approach at the current level, but buy on dip could be a good strategy," Jain said.

The depreciation of the rupee is beneficial for export-oriented sectors like information technology, pharmaceuticals, and automobiles. The fall in the rupee helps companies to provide their products or services at a lower price to the importing countries, stimulating demand.

"The Nifty IT index had a consolidation week, establishing a base around its 50 DEMA (Double Exponential Moving Average)," said Rajesh Bhosale, technical analyst at Angel One. "This level presents an opportunity for the index to rebound towards 45,000–45,500 in the coming sessions. However, a breach below 43,200 could lead to further downside, with 42,300 acting as the next support."

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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:

End

Reported by Darshan Nakhwa 
Edited by Rajeev Pai

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