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CNX IT: Buy the IT sector/components on any dips to 9850-9750 levels - IndiaNotes.com
CNX IT: Buy the IT sector/components on any dips to 9850-9750 levels
HDFC Sec | Published: 07 Feb, 2017  | Source : IndiaNotes.com

Observation:


Daily timeframe: After showing steep decline during early part of last week, the CNX IT sector bounced back sharply during later part and erased most of the intra-week loss.


- Sharp upside reversal has been observed as per daily timeframe chart in the last couple of session, which is indicating a short term bottom reversal in the sector. Meanwhile, the IT sector is now approaching immediate resistance of around 10100 levels (blue dashed up trend line-connecting previous swing lows, as per the concept of change in polarity).


- The key sector participants like Infy, TCS, Wipro, Tech Mahindra, Mind Tree, HCL Tech, OFSS and Just Dial are all now showing upside bounce back post sharp weakness.


Weekly Timeframe: After showing consolidation type movement in the previous few weeks, CNX IT sector witnessed sharp declines and then upside bounce back during this week.


- We observe a formation of small bear candle with long lower shadow, which is indicating emergence of buying interest from the lows. This is positive indication and it suggests buy on dips strategy for near term.


- The underlying trend of IT sector as per larger timeframe is still weak, as we observe a formation of consistent lower tops and bottoms as per larger timeframe chart. If this week’s low of 9592 is protected in the next 1-2 weeks and if IT sector maintained upward bias, then the whole structure could turn out to be a bottom reversal as per larger timeframe.


Summing Up:


- The short term trend of IT sector is positive, but the larger term trend is still down. The IT sector is now approaching a key overhead resistance around 10100-125 levels and there is a possibility of minor weakness from the highs.


- It would be prudent to buy the IT sector/components on any dips from here down to 9850-9750 levels for the upside target of around 10125 levels for the next couple of weeks.

 

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Disclaimer: The author has taken due care and caution to compile and analyse the data. The opinions expressed above are only the views of the author, and not a recommendation to buy or sell. Neither the author nor IndiaNotes.com accept any liability whatsoever arising from the use of any of the above contents.