Nifty IT index and TCS at peaks, robust Q4 acts as catalyst

It was the performance of IT majors that supported the markets from drowning when the PSU Banks and Metals were in mood to drag the benchmark indices down. Nifty IT index jumped 4.8 per cent to record high and record closure at 13,964 and 13,910 levels, respectively. The index ended with fourth consecutive weekly upbeat after it took multiple support at 50 per cent of the previous upward rally and bounced back.

This exuberant bounce was on the back of robust Q4 performance from TCS and rupee decelerating to 13-month low. TCS which holds 24.7 per cent in the Nifty IT index surged as much as 6.6 per cent after it posted highest dollar revenue growth in Q4FY18 in the last 14 months. It posted constant currency growth of 2 per cent QoQ and amid large deal win it upgraded its margin guidance of 26-28 per cent.

Technically, TCS has kind of mirrored the Nifty IT index, where the stock too witnessed a record high and a record closure at 3,422 and 3,402 levels, respectively. The stock had given a multiple point downward sloping trendline breakout at 2,675 on January 12 and thereby had given a consistent upside up to 3,259. The stock thereafter corrected up to 61.8 per cent retracement level and bounced back to surge consecutively for 4 weeks to hit the peak. The stock achieved its channel and flag pattern target and has entered overbought zone. Yet with continued momentum it may give some more upside of up to 100-150 points in near term.