Infosys, TCS: How to trade IT stocks after Trump's order on H-1B visa use

The overall trend on the Nifty IT index looks optimistic as the 50-day moving average (DMA) formed a positive crossover with 200-DMA, resulting in the Golden Cross.

IT stocks slipped on Tuesday after the US President Donald Trump signed an executive order restricting federal agencies from contracting or subcontracting foreign workers. The Nifty IT index declined nearly 1 per cent. Among individual stocks, Tech Mahindra traded over 2.5 per cent lower while HCL Tech and L&T Infotech were down over 1.5 per cent. 

So, how should you trade IT stocks in the current market environment? Here's a look at what technical indicators suggest for them. 

NIFTY IT: Since the Relative Strength Index (RSI) has entered an overbought condition, the upside moves have slowed down. Nonetheless, the trend is unlikey show any major reversal till 17,500 is held on a closing basis. The overall trend looks optimistic as the 50-day moving average (DMA) formed a positive crossover with 200-DMA resulting in a Golden Cross. This exhibits a strong upward direction towards 18,400 levels. CLICK HERE FOR THE CHART

 
Infosys Ltd (INFY): Till this stock trades above Rs 880, the upside should see a rally towards Rs 1,000 levels. On the immediate scale, Rs 930 stays as a support. The overall trend suggests a move towards Rs 1,200 levels. The monthly chart indicates a "Flag Pattern” breakout with trend to witness buying momentum on corrective moves. A crossover of 50-DMA, 100-DMA with 200-DMA further adds to the strength of the stock. CLICK HERE FOR THE CHART
 
Wipro Ltd (WIPRO):  A close above Rs 285 should see a breakout of moving averages. The 50-DMA crossing 200-DMA has resulted in a Golden crossover. Till the counter trades above Rs 270, the strength and optimism may result in a breakout above Rs 285 with a rally towards Rs 310 levels.  CLICK HERE FOR THE CHART
 
Tata Consultancy Services Ltd (TCS):  This counter faces a selling pressure above Rs 2,350 levels, which acts as a major hurdle. However, the overall trend is not indicating any major weakness. The corrective moves should see buying momentum as moving averages hold strong underneath strength. The support remains at Rs 2,170 levels. During the negative sessions, the volumes have remained subdued, another sign of an average selling pressure around Rs 2,250 levels. CLICK HERE FOR THE CHART
 
HCL TECHNOLOGIES (HCLTECH): Conquering Rs 720 has become a tough task for this counter. With this scenario, the RSI, which trades in overbought condition, is gaining on selling momentum. This can make price to correct further towards immediate support of Rs 680 levels. That said, the overall trend is bullish till Rs 650 is defended. Next breakout should emerge above Rs 720 levels.  CLICK HERE FOR THE CHART