Chart check: Nifty IT index could double in one year. Stay put

The Nifty IT index has managed to conquer the resistance of 27,500 which suggests a further upside towards 28,200 and 28,500 levels

Despite an over 170 per cent rally since April last year, the gains in Information Technology (IT) stocks are showing no signs of abating. The Nifty IT index was ruling 0.5 per cent higher on the National Stock Exchange (NSE) in Wednesday's intra-day trade, having soared 14 per cent so far in calendar year 2021. 

According to analysts at Edelweiss Securities, the technology upcycle has just begun and sector players are set to reap benefits of digital boom and cloud adoption. "A distinct trait of this upcycle would be its margin-accretive nature... The biggest differentiator for this cycle is the acceleration it has triggered towards technology spends and quicker decision-making than any other upcycle in the past. All in all, we remain confident that like in past three IT upcycles, multiple re-ratings will be sharp in the early phase of this cycle as well, followed by earnings upgrades as the Street plays catch up," it said in a recent sector report.

It has initiated coverage on mid-cap IT players like Birlasoft, Coforge, and First Source Solutions on hopes that the three industry themes of hyper scalers, digital disruption across the IT services industry and digital transformation of the BPM industry to technology would give them substantial advantage.

On the technical front, the Nifty IT index is expected to double in one year if it rallies another 400 points and hit 28,000-mark. Although, rally may be aggressive in select few players than others, the overall performance of IT stocks could remain phenomenal as stocks are seeing healthy buying even in the overbought category.

Here's how the stocks look on charts:
 

NIFTY IT INDEX

Likely target: 28,200 and 28,500

Upside potential: 1.80% and 2.90%

The index has managed to conquer the resistance of 27,500 which suggests a further upside towards 28,200 and 28,500 levels, as per the daily chart. As long as the index does not breach below 26,800 levels, upside bias may remain intact. CLICK HERE FOR THE CHART

Infosys Ltd (INFY)

Likely target: Rs 1,450 and Rs 1,470

Upside potential: 3% and 5%

The recent weakness has held the support of 100-days moving average (DMA), located at Rs 1,343 levels. Going ahead, a breakout above Rs 1,375 may push the stock towards Rs 1,450 and Rs 1,470 levels. The Moving Average Convergence Divergence (MACD) is supportive of the positive bias. CLICK HERE FOR THE CHART

Tata Consultancy Services (TCS)

Likely target: Rs 3,320 and Rs 3,350

Upside potential: 2.15% - 3%

As the stock is attempting to stabilize above Rs 3,200 levels, any move above Rs 3,250-mark may result in a breakout rally towards Rs 3,320 and Rs 3,350 levels, which are the next resistance zones. Until then, the positive bias will remain intact above the support of Rs 3,100 levels, as per the daily chart. The MACD has risen above the zero line which indicates an upward momentum. CLICK HERE FOR THE CHART

Wipro Ltd (WIPRO)

Likely target: Rs 565 and Rs 580

Upside potential: 2.50% and 5.50%

The stock's breakout rally above Rs 470 levels has not seen any profit booking or negative reversal, as per the daily chart. This shows that the momentum is rising gradually with positive sentiment getting stronger. Going forward, till the counter does not breach Rs 540 levels on th downside, the bullish bias may take the stock towards Rs 565 and Rs 580. CLICK HERE FOR THE CHART

Coforge Ltd (COFORGE)

Likely target: Rs 4,300 (after a breakout above Rs 4,000)

Upside potential: 7%

After a flag breakout above Rs 3,400 levels, the stock has received a substantial support from the market participants and is now heading towards Rs 4,000 levels. The overall trend is bullish above the support of Rs 3,800 levels. Now, the stock needs to breakout above Rs 4,000 mark with aggressive volume to march towards Rs 4,300 levels, as per the daily chart. CLICK HERE FOR THE CHART

Mindtree Limited (MINDTREE)

Likely target: Rs 2,650

Upside potential: 8%

As the stock has decisively closed above Rs 2,300 levels, a breakout rally towards Rs 2,650 levels can be anticipated, as per the daily chart. This would be on the back of a firm support of the Relative Strength Index (RSI), which has seen momentum even in the overbought category. The stock price is resilient to see any weakness or profit booking. The immediate support comes at Rs 2,340 levels. CLICK HERE FOR THE CHART