CNX IT Index has been on a long-term uptrend ever since it bottomed out from 2,000 levels in the first quarter of 2009.
The index surpassed its 2007 peak at 5,857 during mid-2010 and trended higher until it peaked out in January 2011 at 7,591 levels.
This was followed by an intermediate-term corrective downtrend.
However, it found support at around 5,000 levels in August 2011 and resumed its long-term uptrend.
The index has been on an intermediate-term uptrend since then.
It is currently testing a key resistance at 6,700. A strong rally above this level will pave way for an up move 7,200 and then to 7,600 in the ensuing months.
Conclusive breakthrough of the significant resistance at 7,600 will reinforce the long-term uptrend and take the index higher to 8,000 or to 8,500 in the long term.
But, inability to rally above 7,200 level will pull the index down and confine it to consolidating sideways in the broad range between 6,300 and 7,200.
A downward breakthrough of 6,300 can pull it lower to 5,800 or to 5,500. Next long-term support is at 5,000.
Only a tumble below 5,000 will mar the long-term uptrend and pull the index down to its subsequent support level at 4,500. After a strong run since last August, the stock encountered resistance at around 6,700 in February and is testing this level currently.
Immediate support for the index is positioned at 6,300 levels and an upward movement for this support will take the index higher to 6,700 in the medium-term.
Nevertheless, a decisive breach of the support at 6,300 will pull the index down to 6,100 and then to 5,900.
As long as the index trades above 5,800, its intermediate-term uptrend remains in place.
Strong decline below 5,800 will negate the uptrend and pull it down to 5,500 levels.
On the other hand, conclusive weekly close above 6,700 can strengthen the bullish momentum and take the index higher to 6,900 and 7,100 in the medium-term.
A brief technical view on two of the CNX IT Index stocks is as follows.
HCL Technologies (Rs 497.1)
Following a medium-term uptrend from the key support level at Rs 380, the stock encountered significant long-term resistance in the range between Rs 510 and Rs 520 last week.
Its daily indicators are displaying negative divergence, signalling a likelihood of reversal in the trend.
Along with the significance of the long-term resistance, a downward reversal from Rs 510 and Rs 520 range will pull the stock down to Rs 464 and then to Rs 440 in the medium-term.
Significant long-term resistance above Rs 520 is at Rs 560.
Tulip Telecom (Rs 99)
The stock has been on a long-term downtrend from its 2009 peak of Rs 249.
This downtrend accelerated lower when the stock penetrated its long-term support at Rs 135 in November 2011.
Medium and short-term trends are down.
However, the stock is finding support at around Rs 93.
If this sustains, it can go higher to Rs 115 or Rs 122 in the medium-term.
Next important resistance is at Rs 135.
Conversely, a plummet below Rs 93 will drag the stock down to Rs 80 in the medium-term.