How often have we heard that sector rotation is the lifeblood of a bull market? Too often! And there’s a reason why it’s necessary to repeat this statement. At different stages of a cycle, varied variables are at play. This means that every sector will not move in a uniform manner.
Over the past three months, IT has been consolidating as other sectors took the lead. With sector rotation at play, it seems like IT is back in the mix.
Let’s take a look at what IT is doing relative to Nifty 100. After breaking out of an almost 12-year base, Nifty IT has been holding on to the high levels displaying inherent strength. Bouncing off its support the ratio chart favours a positive move in this index going forward.
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Now let’s take a look at some actionable ideas at current levels that look attractive on the long side for the next few weeks and months.
TCS is hovering close to its resistance and looks good for another leg of the rally. The price is back above the crucial level of 3,050 which will act as the risk management level going forward, with a target near 3,830. The price move has been strong and the indicator has steered away from the lower end of the indicator panel.
Tech Mahindra moved past its resistance at 982 and is consolidating above it. With the indicator remaining close to bullish territory, this stock could very well move towards its next resistance as IT circles back into sector rotation.
We are bullish above the level of 982 with a target near 1,370.
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