CNX IT: Weakness likely to continue for coming weeks
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Daily timeframe: The IT sector witnessed a sharp weakness in the last couple of sessions and showed faster downward retracement of the rise of previous 6-7 sessions.
- The key resistance of 200day EMA (blue curvy line-around 10535 levels) has acted as a stiff resistance for the sector during this week and led to a sharp weakness from the highs. The immediate support of uptrend line has been broken on the downside around 10190 levels and the sector closed below it.
- The key sector participants like Infy, TCS, HCL Tech, Mind Tree, Wipro, Tech Mahindra, KPIT and Tata Elxsi have all witnessed steep fall from the higher levels.
Weekly Timeframe: After showing a fine upmove in last week, the IT sector was not able to sustain the follow through upmove and slipped into sharp decline during this week and closed the week lower by around 289 points, as per w-o-w basis.
- The present sharp weakness has emerged from near the strong multi month resistance as per weekly timeframe around 10650 levels (green dashed horizontal line, as per the concept of change in polarity).
- Weekly 14 period RSI has been moving within a bearish high low range of around 60-25 levels and a recent upmove in RSI has failed to reach up to the boundary of 60 levels (made a high up to 41 levels). This is displaying a strength of downside momentum in the market.
- The IT sector is showing renewed weakness after the rise and the present decline is likely to continue for coming weeks. The next lower levels to be watched is around 9750 levels, for the next couple of weeks.
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Unmesh Deshmukh, Founder - Bonvista Financial Planners
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