Nifty IT at 9-month low: Infosys, TCS, HCL Tech fall up to 9% this week; analysts share views

Indian IT stocks experienced a sharp sell-off this week, fuelled by growing concerns about artificial intelligence disrupting traditional business models. The Nifty IT index has slipped to a nine-month low, declining 14% in February alone as persistent selling pressure weighed heavily on technology heavyweights.

Immediate healing looks unlikely as panic-driven declines since February 3 have created a ‘falling knife’ structure, with key supports and moving averages breached and RSI near 20 indicating extreme oversold conditions, said Vatsal Bhuva, Technical Analyst at LKP Securities

“Beyond AI concerns around Anthropic, pressure stems from elevated US bond yields, delayed Fed rate-cut expectations after strong jobs data, FPI outflows, and valuation compression in growth stocks,” Bhuva said.

Carnage in numbers

While the benchmark Nifty 50 index slipped nearly 1% to settle at 25,471.10, the Nifty IT index dragged down over 8% for the week. The Nifty IT index closed 1.44% lower on Friday, settling at 32,681.5.

Investors in top-tier IT firms felt the burn. Infosys shares crashed 9.16% over the week, while Tata Consultancy Services (TCS) counter declined 8.48%. HCL Technologies’ stock ended the week down 8.7%.

Sachin Gupta, VP – Research at Choice Broking, believes that the current volatility is being linked to the launch of ‘Claude Cowork,’ a next-generation AI agent capable of autonomous execution, which has led to concerns about future demand dynamics in the IT services sector.

Vinay Rajani, Senior Technical and Derivative Analyst at HDFC Securities, said the index has witnessed a correction of 22% from its recent peak in just nine trading sessions.

“Index is in the process of forming a bearish head and shoulder pattern on the monthly charts,” Rajani said, adding that a decisive level below 30,900 in Nifty IT index would confirm the neck line breakdown of the bearish pattern, which could drag the index towards the downside target near 26,200.

Gupta said that on the weekly charts, the index has broken below its 200-week EMA. He added that “unless the index holds above 34,300… a sell-on-rise approach may be favoured.”

Key levels to watch: Infosys, TCS, and HCL Tech

Infosys: Infosys touched a fresh 52-week low of Rs 1,281.50 on Friday before recovering slightly to close at Rs 1,369. Gupta said that the stock has broken its 18-month-long consolidation range, which clearly indicates a strong trend reversal. He said traders should stick to a ‘sell-on-rise’ strategy until the stock is able to sustain above Rs 1,450. 

“On the downside, the Rs 1,300 & Rs 1,280 level is expected to act as an immediate support level. A break below this level may see the stock touching the Rs 1,200 level,” Gupta said.

TCS: The IT bellwether hit a fresh 52-week low of Rs 2,585. “TCS remains under heavy selling pressure after breaching the crucial Rs 3,000 level last week,” Gupta said. Technically, the stock is trading well below its 200-day EMA. While a relief rally is possible, the trend remains bearish unless it reclaims Rs 3,000.

“Immediate support is placed at Rs 2,600 and Rs 2,550, while resistance is seen at Rs 2,860 and Rs 3,000,” Gupta added.

HCL Technologies: Gupta said the stock is currently trading below all key EMAs and facing strong resistance between Rs 1,500 and Rs 1,560. Gupta noted that momentum indicators are bearish, and until the stock breaks above Rs 1,560 and holds above its 200-day EMA, the outlook is weak.

Meanwhile, Ponmudi R, CEO of Enrich Money, said, “The trigger has been a combination of escalating AI disruption concerns impacting India’s outsourcing model, continued weakness in global technology stocks (notably the US Nasdaq), and a broader risk-off tone amid fading expectations of near-term Federal Reserve rate cuts.”

“The Nifty fell by 336 points and the week witnessed massive selling in IT stocks reeling under the Anthropic shock. It is possible that the FIIs sold IT stocks heavily in the cash market when the IT index crashed by 8.2% during the week,” said V K Vijayakumar, Chief Investment Strategist, Geojit Investments Limited.