Nifty IT sees 'Golden Cross', up 15% in 3 months; will recovery continue?

Analysts believe that valuation comfort coupled anticipated revival in earnings and possible reversal of AI trade offer a better risk-reward scenario for Indian IT firms.

The Nifty IT index has rallied nearly 15 per cent in the last three month and touched a high of 39,530. In December alone, the index has gained nearly 3.5 per cent as against a 0.6 per cent dip in the Nifty 50 index.  Analysts have attributed the recent pullback in IT shares to the valuation comfort following the near 30 per cent fall in the IT index to the calendar year lows, and reversal of the global AI-trade among other factors.  Despite the recent pullback, the Nifty IT index quotes nearly 11 per cent lower when compared to the previous year's close. In comparison, the Nifty 50 has gained around 10 per cent in the same period.  ALSO READ | What does Coforge's Encora acquisition mean for investors? Analysts weigh  Going into 2026, analysts at Axis Securities believe that a reversal in the global "AI trade," with capital rotating away from crowded and expensive US mega-cap AI stocks towards broader, valuation-sensitive markets, could be supportive for Indian equities.  Meanwhile, analysts at ICICI Securities expect a revival in earnings of IT firms to high-single digit aided by Gen (Artificial Intelligence) led investments with valuations providing a favourable risk-reward scenario. The analysts also highlight that Trump's U-turn on H1B visa rules are likely to be favourable for Indian IT.  "The Trump administration has taken a U-turn with the US policy stance turned supportive, in the form of expanded exemptions for H1B visa related issuance/extensions. Post the US AI hardware frenzy, hyperscalers’ capex intensity is normalising as hardware productivity is flattening. Services demand is set to re-accelerate," the brokerage firm in its Market Strategy 2026 note.  ALSO READ | Market outlook 2026: Earnings, Budget, FII flow, trade deal to drive stocks  That apart, as per reports India's IT hiring rebounded in 2025, rising 16 per cent year-on-year (YoY) to 1.8 million roles. According to Quess Corp, IT hiring in 2026 will be increasingly focused on AI, cloud, cybersecurity and data skills.  Given this background, here's how Nifty IT index is placed on technical charts: 

Nifty IT index

Current Levels: 38,500  Amid the recent rally, the Nifty IT index has witnessed the formation of a 'Golden Cross' on the technical charts. The term 'Golden Cross' implies that the short-term 50-day moving average (50-DMA) of the index has crossed over the 200-DMA.  In general, 'Golden Cross' is considered as a bullish development, as the shorter-term moving average which is seen moving higher, suggests support at higher levels. Technical charts show that the 50-DMA of Nifty IT now stands at 37,058, while the 200-DMA at 36,490. 

 

 

  The above chart shows that the Nifty IT index witnessed the 'Golden Crossover' on December 16. That apart, the IT index is seen quoting above its 20-DMA, which stands at 38,377, and the super trend line support of 37,737.  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.