The analyst said the Nifty IT index has slipped back below all key moving averages after a failed rebound in April, with a gap from April 23 now acting as crucial support.
The Indian IT sector has been under pressure for months, with the NIFTY IT index struggling to find momentum.
Technical Outlook
SEBI-registered analyst Mayank Singh Chandel said the index tried to turn the corner in April 2025 when it managed to close above its 200-day moving average. That bounce didn’t last, and the index soon slipped back into decline.
On Monday, it trades below all the key moving averages — the 200, 100, 50 and 20 — which, according to him, signals continued weakness.
The one hopeful sign, he explained, is a gap formed on April 23 that still acts as support. The index has been hovering around this level for weeks, making it a critical point. If it breaks, the fall could gather speed. If it holds, there’s a chance of a short-term recovery.
On individual stocks, Chandel highlighted TCS, which is hovering close to support between ₹3013 and ₹2899.
A slip below this range could spell further trouble. Infosys, meanwhile, has its own support between ₹1400 and ₹1350, and staying above this level is essential for any kind of rebound.
HCL Technologies is still respecting a rising trendline support, while Wipro is also testing a similar line. He said the next moves at these levels will decide the direction for the stocks.
Fundamental Challenges
Beyond the charts, Chandel pointed to several reasons why the sector is struggling. Hiring has been frozen at the big IT firms for seven straight quarters. Overseas markets are also weighing heavily, with high US interest rates, slow growth, and uncertainty in Europe keeping demand weak.
The rise of artificial intelligence is another factor reshaping the industry. By 2025, three-quarters of companies are expected to be using AI, automating as much as 70% of routine tasks.
This puts a large chunk of IT jobs at risk. At the same time, India’s skill gap is becoming more apparent. While 1.5 million engineers graduate each year, only 42% are employable in the kinds of roles the market now demands, including AI, machine learning, data science, and cloud.
The sector’s dependence on low-value services, which still make up more than half of exports, is also proving costly, as these services are the first to be automated.
Pressure is building from countries such as Vietnam, the Philippines, China and Costa Rica, that can offer talent at a cheaper cost. India still trails the US and China in terms of research, patents and innovation.
Cybersecurity concerns are also on the rise, fuelled by AI-powered attacks and 5G-related risks.
There are some positives. The government is pushing reskilling through programs like “AI for Every Indian,” aiming to prepare the workforce for this shift.
Chandel summed it up by saying the sector is at a make-or-break moment. If key support levels hold, a rebound could be on the cards. But if they fail, the downtrend will likely deepen. He advised traders to watch the support zones closely before making fresh bets.
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