The recent spurt in these stocks is showing signs of trend reversal, as economic recovery in US gathers momentum. The US Fed decision to continue with the tapering strengthens the belief of a rebound. The Fed plan to reduced the monthly purchases of mortgage and Treasury bonds by another $10 billion next month to $35 billion. There are good reasons to expect faster growth of US economy in 2015 and 2016, which augers well for tech companies in India.
The following TTO charts of INFY, Wipro and TCS show a trend transition taking place as the medium term trend oscillator crosses over the long term trend and a short term weakness providing good opportunity to enter these stocks.With a healthy consolidation and correction, these stocks are all set to be major contributors to the Nifty in future.
The following monthly chart of NSEIT confirms bullish alignment pattern in a long term bull market in IT and the recent weakness was a short term correction and an opportunity to get in. With the correction in the IT index seemingly over, the NSEIT now has a target of 11200.
The following monthly chart of USDINR shows Rupee is likely to weaken in the next few quarters to 66-68 levels unless there is intervention by the RBI to maintain Rupee at current levels. A 10-12% depreciation in INR will boost the earnings of tech companies significantly.
