IT likely to outperform, Nifty has resistance at 10,650-10,740

By Abhishek Karande

Technical analysts believe immediate support for the Nifty is between 10,500 and 10,560 and the index is likely to face resistance at 10,650-10,740 levels. Some advise focusing on individual stocks and liquidating positions at higher levels. Information technology is likely to outperform the Nifty index while the pharmaceutical sector is in the process of bottoming out, said technical analysts.

Where are We?
The benchmark Nifty bounced back from the intermediate supports of 10,400-10,420 levels. This bounce could possibly continue until 10,800-10,820 marks. Failure to sustain above these levels would trigger sideways down trend with intermediate support placed at 10,400 levels.


What’s in Store?
In the given scenario, we believe the IT sector is poised to outperform the Nifty Index. Within the same, Infosys is gearing up on higher time frame chart to move in uncharted territory. At CMP of Rs 1,228, initial target is placed at Rs 1,400-1,450 levels. Tech Mahindra to follow the pursuit until the Rs 800 mark

What could Investors Do?
Within the pharma sector, Ajanta Pharma at CMP of Rs 998 is poised to move south initially until the Rs 800-mark and could extend lower moves till Rs 750. Similarly, Cipla could possibly edge lower from the current level of Rs 535 until Rs 450-460 mark. Avoid bottom fishing in Sun Pharma as weakness within the ongoing trend still persists.

(The author is Technical & Alternate strategist, Indianivesh Securities)