Nifty IT index halts at support post profit booking

This week saw the second consecutive week of downbeat for the IT stocks, where Nifty IT tumbled nearly 9 per cent from its all-time high. This southward movement was on the back of two week fall in Infosys, while a sharp weekly fall in TCS, which together hold more than 50 per cent weightage in the index. Wipro, which holds 10.78 per cent in the index had initiated turnaround since the last three weeks.

All-in-all, IT stocks have witnessed profit booking after the release of better than expected Q3 earnings. Rather IT rally started from September 2017 itself ahead of revival expected in the earnings.

Nifty IT index corrected for two consecutive weeks amid profit booking where the prices fell up to 38.2 per cent retracement of the prior upward rally that started on September 8, 2017. The said level is also its 8-weeks EMA support level.

The fall in the index was supported by Oscillators negative crossover in the overbought zone. However, falling volumes along with falling prices, depicts lack of strength on the downside. Hence, going forward, if the index sustains above 12350-12320 levels on weekly closing, we may see a bounce back.

IT industry outlook for CY2018 looks positive because of higher spending amid soaring US economic condition. But investors are suggested to be cautious while investing.