 "Infy, TCS: Should you book profit in IT stocks amid global tech sell-off?")
The technology-benchmark index - NASDAQ tumbled 3.6 per cent in the US dragged by earnings disappointment by Tesla and Google. Last week, too, the tech-laced index fell sharply owing to a sell-off in chip-makers following Donald Trump's adverse comments on Taiwan.
The NASDAQ index has plunged 7 per cent in the last two weeks.
Back home, in the same period, the NSE IT index has surged nearly 7 per cent riding on better-than-expected Q1 earnings from IT majors in India. CoForge, MphasiS and Infosys were the major gainers, up 11 - 14 per cent each.
TCS, Tech Mahindra, LTIMindtree, HCL Technologies, L&T Technology Services and Persistent Systems were up 4 - 10 per cent each.
Given this background, should you consider to book profit in IT shares or is there more steam left?
Here's what the charts suggest:
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Nifty IT
Current Level: 39,860
Downside Risk: 3.9%
Support: 39,400
Resistance: 40,100; 40,300; 40,500
The Nifty IT index is seen consolidating in the last five trading sessions after hitting a high of 40,683 on July 19.
On the daily scale, among the key momentum oscillators the RSI (Relative Strength Index) has seen a negative crossover, while the MACD (Moving Average Convergence-Divergence) and Slow Stochastic are in neutral mode.
The IT index has near support at 39,400 levels, below which the index may dip towards its 20-DMA (Daily Moving Average) at 38,350-odd levels, thus indicating a downside risk of 3.9 per cent from present levels. CLICK HERE FOR THE CHART
On the upside, the index has near resistance at 40,100 followed by 40,300 and 40,500.
TCS
Current Price: Rs 4,317
Bias: Range-bound
Support; Rs 4,260; Rs 4,200; Rs 4,120
Resistance: Rs 4,360; Rs 4,500
TCS stock has been consolidating in a narrow band of Rs 4,260 - Rs 4,360 in the last five trading sessions. A breakout in the either direction can open the next leg of the trend. CLICK HERE FOR THE CHART
Having said that, the overall bias for the stock is likely to remain positive as long as the stock sustains above Rs 4,200 on a closing basis.
An upside breakout can trigger a rally towards Rs 4,500 levels. Whereas, in case, of a breakout on the downside, could lead to re-test of the 20-DMA at Rs 4,120 levels.
Infosys (Infy)
Current Price: Rs 1,820
Downside Risk: 6.6%
Support; Rs 1,770
Resistance: Rs 1,840
On the Infosys daily chart the RSI is on the verge of turning negative and the MACD too is showing signs of convergence. Thus, Infy may display a tepid trend in the near-term.
The weekly chart indicates that the bias is likely to remain upbeat as long as the stock holds above Rs 1,780. Break and sustained trade below the same can trigger a fall to Rs 1,700-mark.
In order to resume the uptrend, the stock will need to clear the resistance around Rs 1,840 levels. CLICK HERE FOR THE CHART
HCL Technologies
Current Price: Rs 1,587
Upside Potential: 5.9%
Support; Rs 1,535
Resistance: Rs 1,590; Rs 1,610
HCL Technologies stock is seen moving in a rising channel support by a favourable price-to-moving action on the daily scale. The near-term bias for HCL Tech stock is likely to remain positive as long as the stock holds above its 20-DMA at Rs 1,535. CLICK HERE FOR THE CHART
On the upside, the stock is likely to test 1,680 levels. Break and sustained trade above Rs 1,680 can trigger a fresh round of buying at the counter. Near hurdles for the stock is seen at Rs 1,590 and Rs 1,610 levels.
LTIMindtree
Current Price: Rs 5,608
Downside Risk: 5.4%
Support: Rs 5,520
Resistance: Rs 5,800
LTIMindtree stock is trading close to its 20-DMA support which stands at Rs 5,520. Among the key momentum oscillators, the RSI and MACD have shown a negative crossover; hence the stock may break the 20-DMA support on the downside.
As and when that happens, the stock could seek support around its super trend line at Rs 5,380 levels, below which the next significant support stands at Rs 5,305. CLICK HERE FOR THE CHART
On the other hand, in case, the stock holds above the 20-DMA, it can bounce back to Rs 5,800 levels.