Daily timeframe: The IT sector has witnessed sharp decline on Thursday (on the back of disappointing weak quarter result of sector major Infosys) and closed the day with sharp weak note.
- The IT sector has been moving in a larger ascending channel as per daily timeframe (blue dashed ascending parallel lines) and present decline in the sector could be in line to reach the lower end of channel (lower end of channel is now placed around 9860-80 levels for next week).
- All the sector participants of IT sector are in a sharp negative trend and they are all currently positioned to show further weakness ahead.
Weekly Timeframe: The downside momentum in IT sector got strengthened during this week and the sector has witnessed huge sell off of around 421 points as per w-o-w basis.
- The previous upside bounce back in the IT sector (mid of Feb to mid of March 17) has been reversed sharply with faster retracement on the downside. This is negative pattern and could indicate more weakness in coming weeks.
- The weekly 8 period MACD indicator is showing negative signal (MACD line cutting below its signal line from near equilibrium line). This is suggesting ongoing strength of downside momentum in the IT sector.
- The underlying trend of IT sector as per smaller and larger timeframe is weak and one may expect further weakness for coming weeks.
- Having declined sharply during last few sessions, there is a possibility of minor consolidation or minor upside recovery attempt in the next few sessions, but, the expected upside bounce back or recovery attempt could eventually result into sell on rise action.
Click here to read the full report
- Hence, one may create short positions in IT sector/sector participants at current market and also look to on rise up to 10150- 10200 levels. Downside levels to be watched is around 9850-9800 in the next 1-2 weeks.