The Nifty IT index has corrected over 10% this month lead by Infosys (down 18%), Tech Mahindra (down 15%) and Wipro (down 11%) so far.
I recorded a video last week on Equitymaster's YouTube channel explaining why the bulls are tiring in the IT sector. The results are there for you to see as the index is now resuming the bearish momentum in today's session.
In case you haven't watched the video yet, I highly recommend you do so here: IT Stocks: Goodbye Bulls.
The distribution phase of Wyckoff theory is in place on chart of IT sector. This signals the bears have the upper hand.
The gap-down opening today resumes the bearish momentum on IT stocks. These stocks are shorting candidates as largecaps are leading the way lower.
I believe IT stocks are a 'short on rise' opportunity as most of them are in future & options (F&O) segment.
In case the index closes below 31,500, the downside momentum could accelerate in the short term.
At present, the IT index is trading down 2% at 31,800 levels. From the index, Mindtree, Tech Mahindra, and L&T Infotech are the top losers today.
I'll share more on his trend on my Telegram group. If you're interested in being part of my charting journey as I share how to create wealth from profitable trade setups, join my telegram channel - Fast Profits Daily.
Meanwhile, also check out the below video where India's #1 trader Vijay Bhambwani discusses the fall in IT stocks and whether the Nasdaq index is leading them lower.
Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...
Brijesh Bhatia Research Analyst and expert chartist, is the editor of Alpha Wave Profits. Fully committed to his craft, Brijesh has mastered the art of making money by trading using technical analysis. Brijesh has an MBA from ICFAI and 16 years of experience in India's financial markets. He began his career on Dalal Street as commodities dealer and it wasn't long before he developed his own unique trading system. Brijesh worked on his trading system until it could be expected to deliver 5 units of return for every unit of risk.
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