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Nifty IT index reached an all-time high of 46,002.65, with all 10 constituents posting gains; Here’s why IT stocks are in demand today
IT Shares Rise
In Thursday morning trading, the Nifty IT index reached an all-time high of 46,002.65, with all 10 constituents posting gains, making it the only index in the green at that time.
Coforge and Tech Mahindra led the rally, each surging by up to 4%.
Several other IT stocks, including Infosys, Wipro, HCL Technologies, and Mphasis, also reached their 52-week highs. Coforge saw a 3.8% rise, reaching Rs 9,349, while Tech Mahindra climbed 2.7% to Rs 1,807. LTIMindtree gained 2%, hitting Rs 6,733, and Infosys rose 1.5%, reaching Rs 1,998.
Additionally, shares of Persistent Systems, Wipro, HCL Technologies, and Mphasis saw significant gains, rising between 1% and 2.6%.
The Indian rupee, however, fell by 2 paise to 84.85 against the US dollar, nearing its all-time low. This dip was attributed to foreign fund outflows and rising crude oil prices.
When the rupee weakens, IT companies typically benefit, as a significant portion of their revenue is earned in US dollars. A weaker rupee increases the value of these dollar-denominated earnings when converted back to INR, boosting profitability.
Meanwhile, in the US, the Nasdaq hit an all-time high, surpassing the 20,000 mark for the first time during Wednesday’s trading, which also helped lift sentiment in India’s IT sector. However, US markets closed mixed, with the Dow Jones falling by 0.22%, the S&P 500 rising 0.82%, and the Nasdaq climbing 1.77%.
The rally in IT stocks was also fueled by expectations that the Federal Reserve will cut interest rates later this month after inflation data came in line with estimates. The US Labor Department reported that the Consumer Price Index (CPI) rose by 0.3% month-on-month in November, matching forecasts, with an annual increase of 2.7%.
From a technical perspective, the Nifty IT index has seen a strong bullish breakout, breaking through a key trendline resistance, according to Jigar S. Patel, Senior Manager of Equity Research at Anand Rathi. Patel explained that this trendline breakout signals a shift in market sentiment, suggesting sustained upward momentum. The index has also surpassed the R4 level of the Camarilla pivot on the weekly timeframe, further strengthening the bullish outlook.
Patel expects the index to test the 49,000 level in the coming weeks, which aligns with the R5 Camarilla pivot and represents a significant resistance zone. He recommends booking profits between the 48,000-49,000 range, as the 49,000 mark could act as a strong resistance level and potentially halt the rally. This strategy aims to capture gains from the bullish move while staying cautious of potential resistance at higher levels.
Disclaimer:Disclaimer: The views and investment tips by experts in this News18.com report are their own and not those of the website or its management. Users are advised to check with certified experts before taking any investment decisions.
