INFY has significantly underperformed the market, ever since Nifty broke out to start a new bull market in March 2014, in effect impacting the market negatively. The stock has fallen from the high of Rs. 3,844 in March 2014 to Rs. 2,907 in May 2014, a correction of almost 25%, pretty significant considering its weight in Nifty. Though technology as a pack has underperformed, the fall in INFY was more sever due to company specific developments.
Is the storm over for INFY ?? In our update Is the Worst Over for Tech Stocks ?? , dated June 25, 2014, we had indicated a possible trend reversal for the tech stocks. Since then the CNX IT index has moved up from 9,700 to 10,360 and may be moving ahead to the higher target.
The daily chart of INFY had a failed inverse H&S formation earlier, but has been again forming a bigger inverse H&S. A cross over Rs. 3,430 with higher volumes may take INFY to a new high of Rs. 3,900 in the medium term. In the monthly chart, TTO is making bullish pattern formation with similar target.
Though INFY has promising chart formation, whether it will take its leadership position to propel Nifty to new highs ?? We will have to wait and watch !!