Technical Insights: Nifty IT index consolidates at upside, Frontliners may witness breakout

Indian stock markets have been plummeting since the end of January 2017, thereby Nifty IT index too saw a correction from its all-time high levels. However, recently, when the benchmark indices witnessed breather, followed by a breather after the first week of February, Nifty IT index witnessed bottom fishing followed by fresh buying during the same period. The whole index was pulled up by a revival in the frontline IT stocks.

On the weekly time frame, the index took support at 50 per cent retracement of the prior upward rally and bounced back. However, the negative sentiments spread across are refraining the index to gain momentum. Thereby, the index has halted at the resistance level of 12900, since February 23.

Infy which forms 26 per cent of the index is in consolidation since the start of March but may see further upside once 1170 levels are broken. On the contrary, TCS which holds 25.7 per cent, has just bounced back after correcting for three days and can see potential upside above 3090 levels. While HCL Technologies, the third biggest IT company by weightage, is on the verge of breaking its downward sloping trendline level of 960.

Markets are down with not much participation from the traders/investors. Thereby markets are indecisive and lack momentum. We can expect further upside in the IT index only if the markets retain momentum. Till then consolidation at the upside is inevitable.