Nifty IT Index has corrected 27 percent year-to-date due to rising supply side shortages, fall in margins, higher attrition, rising sub-contractor and travel costs, rate hikes by the US Fed, fears of recession and geo-political tensions in client-centric regions.
The Indian IT sector has remained a torch bearer of the country’s growth story for past few years. The domestic IT companies have been able to make their mark globally and have steered the journey of global conglomerates in digital transformation and migration to cloud among lot of other latest technologies. No wonder, they have been riding the growth momentum.
Shares of IT companies scaled unprecedented highs despite supply side issues and record attrition. However, when the when the FIIs started pulling out money from the Indian equity market due to interest rate hikes and other macro factors, Nifty IT index witnessed one of the biggest corrections amongst all other sectoral indices on the NSE.
Even today, while all other sectoral indices witnessed a turnaround with constituent stocks showing an uptrend, none of the Nifty IT stocks has moved above its 200-DMA (daily moving average). All its constituents are trading much below their 200-DMA. Such was the impact of recent correction on the sector.
The 200 DMA reflects the average price over the past 200 days (or 40 weeks). It is an important long-term moving average indicator that gives a sense to the market participants regarding the long-term trend in the underlying asset. If price is above the 200 DMA, the long-term trend is considered positive and if the price is below 200 DMA, the long-term trend is considered negative.
Source:https://www.moneycontrol.com/news/sector/nifty-it-only-sectoral-index-trading-below-200-dma-how-soon-can-you-expect-a-turnaround-8871001.html