WIPRO BUY OR SELL???

Wonder Which Stocks to trade on Monday ? Call now to Get Best Stock Future Trading Tips 7772909587 📲
Nifty edged higher in today's midday trade amid weak global sentiment on fears of a likely aggressive rate hike by the US Federal Reserve. Sensex is up about 50 pts to 53480. Nifty50 is idling around 15960. The broader markets also posted modest gains. Mid-cap and small-cap indices rose 0.4% and 0.1%, respectively. The biggest drag on the market continues to be FII sales, which have topped $30 billion so far this year. But this month FIIs were buyers for 2 days including yesterday. This means that some FIIs have started buying into segments where valuations have become attractive.

After not-so-impressive results from IT major TCS, the entire IT package seems to take a hit. Yesterday, TCS broke below INR 3,000 and fell to its lowest level in 16 months. Today, Wipro, another large-cap IT stock, fell below its key support of INR 400 to a low of INR 391.05, its lowest level in the last 18 months.Nifty IT itself has dipped to its lowest level since May 2021, making it clear that weakness in IT isn't limited to a few counters. Over the past month, Wipro shares are down 10.4%, TCS is down 6.88%, Infosys and Tech Mahindra are down 0.79% and 5.89%, respectively. .

Getting back to Wipro's stock price, the stock has fallen for the past 6 straight sessions and is down 6.55% this week alone as of 12:50 PM IST. In mid-autumn, the stock convincingly broke its main support of INR 400 by a fair margin and is trading comfortably below. If the stock closes below this support today, the breakdown would be confirmed on the weekly chart, which is a much more encouraging signal than a breakdown on a lower time frame like a daily chart. 

Options data also points to a bearish view. At 400 CE there was a massive increase in open interest at over 1,000 contracts. This is the exact level taken out today and option sellers do not expect Wipro shares to rise above INR 400 by the close of July 28, 2022. A put resolution was also witnessed in today's session as the stock fell to its lowest level in 18 months. The highest OI is at the ITM 400 PE with over 1.7k contracts which has started to unwind in today's session and as the stock would fall more short positions would be liquidated at that strike price.

On the weekly chart, the next support appears to be around INR 380. These are the levels last seen in 2020. Given the weakness across the IT space, Wipro stock could continue falling, at least until the next support.On the downside, however, the stock has also started forming a bullish divergence at the 52-week low, which could lead to a possible recovery in the near term, but there are no signs of a reversal at this time. If one wants to profit from divergence, one needs to look out for reversal signals like bullish candles, breaking previous candle highs, etc. and wait for the momentum to reverse rather than trying to catch a falling knife.