Last week, the IT index witnessed the biggest weekly decline since March 2020.Image Credit source: Google Gemini
Hit hard by a weak fourth quarter and cautious management guidance, India’s technology index, Nifty IT, fell nearly 10 percent in a single quarter. The special thing is that the index lost its five-week gain in a single week and started a historic decline. Experts have warned that this is just the beginning. A further decline may be seen in the coming weeks. If we look at the figures, investors have suffered a loss of Rs 2.5 lakh crore due to the fall in the tech index. Which is considered to be the biggest weekly decline after March 2020. Then due to the Covid 19 epidemic, the index had sunk by 13.6 percent.
IT index in long-term decline
Himanshu Gupta, head of research retail broking at Jainam Broking, said in an ET report that the long-term charts of all three major IT stocks look bad, and it is clear that money is flowing out. All three stocks are trading below their respective 200-week moving averages and making lower cyclical lows — something rarely seen in India’s IT sector, suggesting they are in a long-term downtrend. Analysts remain ‘underweight’ on all large-cap IT stocks and believe that there is a possibility of not only further price correction in the sector but also a ‘time correction’ where investors may not get any significant returns in the next 2-3 quarters.
Not good quarterly results
TCS, Infosys and HCL Tech all released Q4FY26 results, which saw mixed revenue growth amid macroeconomic concerns. TCS’s strong margins did not provide much relief. The biggest reason for this is that the weak guidance of other companies had a very bad impact on the marketer’s sentiment. The selling intensified after Infosys released its quarterly report on Friday. Rupak Dey, senior technical analyst at LKP Securities, said in an ET report that ‘bears’ (sellers) were seen returning in Nifty IT, as there was heavy selling in the index after the quarterly results of Infosys. The RSI has entered a ‘Bearish Crossover’ and is falling. Day is looking for support at 25,500 and resistance at 32,000, and is warning that the index may continue to fall towards lower levels.
Confidence of foreign investors broken
The Nifty IT index has declined by about 25 percent since the beginning of the calendar year. Emkay’s model portfolio also shows similar caution in the large-cap segment. It has kept its investment in the technology sector low and has given it only 7 percent weightage. In this sector, it has included only Infosys and HCL Tech in its portfolio. FIIs (foreign institutional investors) have been the biggest sellers in the IT sector. Till mid-April this year, he has sold shares worth about Rs 20,000 crore of his stake in this sector. For now, India’s once-favorite IT sector appears to be in complete retreat due to weakening technical indicators and lack of confidence among institutional investors.
