Nifty Bank: TCS, Coforge, Intellect showing recovery signs: Rupak De

As IT stocks are outperforming the broader market, Rupak De, Senior Technical Analyst at LKP Securities, says TCS has also shown signs of a turnaround while Coforge and Intellect are also starting to display initial signs of recovery.

Edited excerpts from a chat:

Nifty ended the week around 1% higher after the 7-run winning spell broke on Thursday expiry and the downtrend deepened on Friday amid tensions between India and Pakistan. How should one prepare for the next week when tensions may escalate further? India is also hoping for clarity on a bilateral deal with the US which would be a positive for the market.
Nifty’s recent rally hit a wall near the 24,350–24,400 supply zone, right before it could test the 61.8% Fibonacci retracement of the last down move. On the lower timeframes, there’s a small double top playing out, and with RSI losing steam, the setup’s hinting at a possible short-term dip. Key support sits at 24,000 and 23,800—if those give way, we could see faster profit-booking kicking in, dragging the index toward the 20-EMA around 23,515 or even lower.

On top of that, rising tensions between India and Pakistan are keeping risk sentiment in check. So, traders might want to tighten up stop-losses on longs and go slow with fresh entries. Safer to stick with Large Caps and top-notch Midcaps for now. Dips could give some tactical buy opportunities, but the smart money might wait for clearer signals—both from the charts and the geopolitical front—before going aggressive again.

After falling for 3 consecutive days, does Nifty Bank look poised for more down downside? What does the chart indicate?
The recent sharp rally that took Bank Nifty to a fresh all-time high seems to have hit the brakes around the 56,000 mark—if not topped out, at least paused for now. A bearish engulfing pattern on the daily chart is flashing early signs of exhaustion, hinting that the bulls might be taking a breather. Add to that, a spinning top on the weekly chart—often a classic signal of indecision or a possible trend reversal. So, in the near term, we’re looking at a decent chance of a price correction or at least some sideways action. That said, the medium-term setup still looks solid. Once this correction phase plays out, we could be in for another big leg up. On the downside, support is seen near 53,400. On the flip side, if momentum picks up again, Bank Nifty could be eyeing levels around 57,700 to even 60,000.

How would you read Nifty IT rally in the week? Was it led by short-covering amid oversold levels?
The IT index, which corrected from its all-time high of 46,000 in December last year to around 31,000 by early April this year—a sharp 32% drop—has now entered oversold territory. At current levels, the space is starting to look a bit attractive. Moreover, a double bottom formation on both the Nifty IT index and the Nifty/Nifty IT ratio chart suggests a potential outperformance by IT stocks in the short to medium term. As a result, we anticipate a decent rally in the sector over the next 3 to 9 months.
Help us find some IT stocks that are showing strength in the market now and are poised to rally in the week ahead as well.
One of the top large-cap IT stocks with significant market presence—TCS—is likely to witness a decent recovery after a prolonged correction. The stock has already shown early signs of a turnaround. In the midcap and small-cap space, Coforge and Intellect are also starting to display initial signs of recovery.

Tata Elxsi shares ended the week 14% higher. Time to book profits now?
Some profit booking might be on the cards as the stock has formed a bearish engulfing pattern on the daily chart, indicating waning bullish momentum. In the short term, the stock may enter a consolidation phase. Support is placed at 5,580 and 5,300, while resistance is seen around the 6,000 mark.

Give us your top trading ideas for the week ahead.

Sell CONCOR below 675 | Target: 650 | Stop-loss: 690

CONCOR has broken down from a consolidation zone on the daily chart, signaling building bearish momentum. The stock also faced rejection near the previous range high, adding to the weak sentiment. A breakdown below 675 could open room for further downside toward 650. Keep a stop-loss at 690.

Buy TCS around 3434 | Target: 3700 | Stop-loss: 3200

TCS has broken out of consolidation, marking the start of a fresh uptrend after a prolonged correction. RSI is showing a bullish crossover and is heading north, indicating rising momentum. The setup looks promising for a move toward 3,700 in the short term. Maintain a stop-loss at 3,200.

Sell BANDHAN BANK around 168 | Target: 160 | Stop-loss: 173

Bandhan Bank has slipped post-consolidation on the daily chart, confirming bearish intent. It was rejected at the 200-DMA, and RSI has turned lower with a bearish crossover. The overall tone is weak, and the stock could head toward 160. A stop-loss can be placed at 173.