The Nifty IT index is currently down 4% for the week, and if chart patterns are anything to go by, the index may see further downside from current levels. CLSA's Laurence Balanco believes that the IT index can see another 7% to 8% downside basis current chart patterns.
"At the sector level, it is worth noting that the NSEIT sector has broken down from its January / March topping pattern (head-and-shoulders) with this week's break below 36,134 - 36,135," Balanco said.
The Nifty IT index made a low of 35,697 on Wednesday, before snapping a four-day losing streak on Thursday.
According to the chartist, this breakdown supports a downside target of 33,272, 7.7% lower than Thursday's closing levels.
As a result, shares of Accenture ended over 9% lower on Wall Street on Thursday. This has already hurt Indian IT shares listed in the US. Infosys' US-listed shares fell 4% overnight, while those of Wipro ended 2% lower.
Accenture further said it continues to see client caution on IT projects, especially on the smaller end.
In case, the Nifty IT does end lower on Friday, it will be its fourth weekly loss in the last five weeks and mark its worst weekly performance since April 2023.
(Edited by : Akanksha Upadhyay)
First Published: Mar 22, 2024 6:58 AM IST
