IT Stocks To Ride On Momentum Next Week, Say Experts

Information technology stocks are poised for a rally in the coming week, according to experts.

"The resistance for the Nifty 50 index is around 21,500, but the support is coming at 21,200–21,300. It's a very strong support base," said Shilpa Rout, derivatives lead analyst, Prabhudas Lilladher Pvt.

The Nifty ended higher by 94.35 points, or 0.44%, at 21,349.40, and the Sensex closed 241.86 points up, or 0.34%, at 71,106.96 on Friday. Intraday, the Nifty hit a high of 21,390.50 points, while the Sensex touched the 71,259 mark.

For Bank Nifty, the 47,000 mark is strong and any decline towards that level should be a buy, she said. The index closed 0.73% lower at 47,491.85.

"The target of 48,300 will be the first mark, since there is a hurdle. Once it crosses that, we will see an upside," Rout said.

She listed the stocks that could do well in the coming week. "Wipro Ltd. is showing momentum, leading the IT pack. It is very poised to test the Rs 480-Rs 500 zone. Second would be a buy in Jubilant Foodworks Ltd., which has given a strong breakout over the Rs 570 zone with a target of Rs 620."

Wipro Ltd. shares rose as much as 7.44% to Rs 466.30 apiece, the highest in over a year, before paring gains at close.

In the banking space, her pick is Kotak Mahindra Bank Ltd., which is making an attempt to cross the Rs 1,900 mark. "The immediate target would be Rs 1,895-1,930 and a stop loss at Rs 1,800."

Chola Securities Ltd.'s Dharmesh Kant also expressed optimism towards IT stocks, which are likely to do well till the earnings kick in.

"Going by Accenture results, it is likely that IT companies will halt their negative guidance that they have been giving. That would be positive news," said Kant, head of equity research at the brokerage. Large-cap IT stocks are poised for a good move, according to him.

Tata Consultancy Services Ltd. and LTIMindtree Ltd. are his top bets for the rally.

Chemicals is a challenging territory due to its reliance on the European market, Kant said. "We would like to look at Q3 earnings and commentary from managements. Till then, I think it's a technical and a momentum play."

The market in general is looking at "sentimental value capture," where cheaper buys are being lapped up and the surprise side is running "too high," he said.

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