Nifty IT enters bearish phase, charts signal sell on rise trend: Analysts

The IT index decline gathered pace after it broke down from a Head and Shoulders pattern on the weekly chart - a classic signal of a structural trend reversal, explains Sachin Gupta of Choice Broking.

The NSE Nifty IT index has tumbled 21 per cent so far in the month of February, and now quotes at its lowest level (30,053) since August 2023 amid the AI-triggered sell-off.  India is seen as a reverse AI-trade by global experts. Christopher Wood, global head of equity strategy at Jefferies, said at the BS Manthan on Tuesday that as long as this AI CapEx is surging, Indian markets, will continue to underperform. READ MORE  The overseas brokerage firm recently downgraded Indian IT companies Infosys, HCL Technologies and Mphasis to 'Hold'; LTIMindtree, TCS and Hexaware to 'Underperform,' citing AI-related concerns. READ MORE  Separately, analysts at Citrini Research outlined a scenario where Indian tech majors may see contract cancellations accelerating through 2027 as the marginal cost of AI coding agents collapses.  The report highlighted that India's IT services sector would see over $200 billion annually. READ MORE  The sell-off in IT shares which started at the begining of the month was largely triggered by global concerns around artificial intelligence.  "The launch of highly efficient enterprise tools such as Anthropic’s Claude Code sparked fears that generative AI could begin eating into traditional Application Development and Maintenance (ADM) revenues — a key revenue stream for Indian IT companies," said Sachin Gupta, VP – Research at Choice Broking.  With the 21 per cent fall in February, the Nifty IT index has slipped into a clear bearish phase, reckons Gupta.

Technical analysts at Geojit and Choice Broking paint a worrisome outlook for the Nifty IT index.

Sachin Gupta of Choice Broking cautions that the Nifty IT index has slipped into a clear bearish phase in February 2026, following the 21 per cent correction.  "The Nifty IT index decline gathered pace when it broke down from a Head and Shoulders pattern on the weekly chart — a classic signal of a structural trend reversal. The fall dragged the index below its crucial 10-month low of 30,918, confirming that the broader trend has turned weak," explains Gupta. 

 

 

  From a technical standpoint, the picture has deteriorated further. The analyst highlights that the Nifty IT index has breached the important 61.8 per cent Fibonacci retracement level (Golden Ratio) and witnessed a negative crossover of key moving averages, commonly known as a Death Cross.  This suggests that the earlier "buy on dips" approach has now shifted to a "sell on rise" strategy, says Gupta.  On the downside, the analyst from Choice Broking expects the IT index to fall towards the 29,300 – 28,700 support zone.  Echoing a similar outlook, Anand James, Chief Market Strategist at Geojit Investments says that the standard deviation studies point to 29,961 as the nearest support for the index, below which next major supports are seen at 28,800 and 27,200 levels.  The analyst adds that momentum indicators are clearing in favour of a further slide for the index.   For an upside move, James expects the Nifty IT index to face intra-day resistance around 30,300 levels and sees 31,300 as the key hurdle on a closing basis.  Disclaimer: The views expressed by the brokerage/ analyst in this article are their own and not those of the website or its management. Business Standard advises users to check with certified experts before taking any investment decisions.