IT stocks traded lower on Tuesday, with the Nifty IT index falling more than 2% in early trade, emerging as the worst-performing sectoral index.
All constituents of the Nifty IT index traded in the red, with Infosys, Mphasis, Wipro, Tata Consultancy Services (TCS) and HCL Technologies among the major laggards.
Infosys shares led the losses, declining around 3%, while Mphasis and TCS fell about 2% each. Wipro, HCL Technologies, Tech Mahindra and Persistent Systems dropped over 1% each.
Meanwhile, LTM, Coforge and Oracle Financial Services Software traded lower by less than 1% each.
The selling pressure in IT stocks was primarily triggered after Infosys' downgrade of its FY27 revenue growth guidance, concerns over AI-led disruption, and uncertainty around global technology spending.
Rising crude oil prices and caution ahead of the US Federal Reserve's policy decision are adding to broader market concerns.
Infosys lowered its FY27 revenue growth guidance to 1%-2% in constant currency, from 1.5%-3% earlier, reflecting subdued client spending, pricing pressure and heightened competition.
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The guidance cut has raised concerns about the demand environment for the broader IT services industry.
Meanwhile, the broader market's concerns about elevated crude oil prices and uncertainty ahead of US Federal Reserve's monetary policy are adding to the cautious sentiment.
Additionally, investors also remain concerned about how Artificial intelligence (AI) could affect the traditional IT services business model. The AI concerns have contributed to most of the recent volatility in Indian IT stocks.
Technical View
Nifty IT index has rallied over 12% in one month. However, the index is currently undergoing sideways consolidation after its breakout above the 31,950–32,130 resistance zone failed to sustain.
Hitesh Tailor, Technical Research Analyst at Choice Broking noted that the Nifty IT index is hovering near its 50-Week EMA, while repeated rejections around 32,900, aligned with the 200-Week EMA, indicate strong overhead resistance.
Meanwhile, Infosys, TCS, Wipro and LTM continue to trade below their respective 50-Week and 200-Week EMAs, with rejections from the 50-Week EMA reflecting continued weakness across major constituents.
“Going ahead, the Nifty IT index is likely to remain range-bound, with 31,000, near its 200-Day EMA, acting as a crucial support and 31,950–32,130 as the immediate resistance zone. A sustained move above this resistance band would signal improving momentum, while a breakdown below 31,000 could intensify selling pressure,” said Tailor.
Overall, he believes the index reflects sideways consolidation, but the underlying weakness in major IT stocks warrants caution until a stronger recovery is established.
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