A drastic shift in sentiment occurred on D-Street, moving from a celebratory atmosphere to a more somber tone. The market experienced a significant downturn from its intraday high, with the Nifty 50 index reaching a fresh all-time high but failing to sustain its gains, closing lower around the 22,600 mark.
The Nifty IT index was among the top losers, declining by over 1% on Tuesday. April has been a challenging month for the Nifty IT index, which fell by nearly 5%, marking the second consecutive month of losses. This downturn was influenced by mixed earnings reports from IT companies and uncertain guidance, which contributed to the overall negative sentiment.
Since February 23, 2024, the Nifty IT index has been on a downward trajectory, forming a series of lower highs. On March 19, the index experienced a gap-down opening, which was followed by another gap-down on March 22 after Accenture issued a warning regarding its guidance. Although the index attempted to consolidate and fill the gap, it only partially filled the gap from March 22.
Throughout this period, the index consistently traded below the 20-day moving average (DMA), indicating a downward trend. The index subsequently dropped below the swing low of 34,626, set on April 3, 2024, and experienced another gap-down opening on April 16, 2024. Despite almost filling the gap from April 16, the index failed to break above the 20-DMA, leading to a quick reversal due to profit booking.
Looking ahead, the critical support level for the Nifty IT index is at 32,915, which is the swing low registered on April 19, 2024. On the upside, resistance is anticipated between 34,220 and 34,280, a confluence of a downward-sloping channel and the 20-DMA. Unless this resistance range is decisively breached, any rallies are likely to be temporary.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.
Published on: May 1, 2024, 11:07 AM IST
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