The Nifty IT Index remains subdued due to weakness in its largest components, like Tata Consultancy, but under the surface, there’s been leaders like Info Edge (Naukri) trending well on an absolute or relative basis.
With that said, several charts are suggesting this leader may be transitioning into a laggard.
Let’s take a look at the chart that sparked this thesis.
Below is a weekly chart of Info Edge (Naukri) relative to the Nifty Next 50. Since its breakout to new all-time highs in early 2014, we’ve seen the Fibonacci Extensions from its 2008-2009 base serve as solid support/resistance levels. Recently, prices hit our fourth upside objective at the 423.6% extension near 0.1056 and have not exceeded it yet.
Click on chart to enlarge view.
This also comes as momentum diverges negatively from price by making lower highs as prices make higher highs. In our view, as long as prices are below their highs set earlier in the year then there’s potential for this trend to reverse and Info Edge to begin underperforming its peers.
Let’s take a look at the stock relative to the rest of the IT sector.
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