Information Technology (IT) stocks traded high of Friday, February 27 despite weak trends in the Indian stock market today. The Nifty IT index rallied as much as 2.45% with almost all the constituents trading in the green.Nifty IT rose for the third consecutive session today, rising 4.16% over the past three days.
Mphasis, LTI Mindtree, Infosys, Coforge and Tech Mahindra were the top Nifty IT contributors, gaining over 1% each. HCL Technologies, Wipro and TCS were also trading in the green.
The rally in IT stocks comes despite a fall in the benchmark indices. The BSE Sensex, and the NSE Nifty 50 were trading half a percent lower each.
Despite today’s gains IT stocks are reeling under loses this month weighed down by concerns of AI-led disruptions. The Nifty IT index has crashed nearly 20% so far in February.
“At the index level the market has been on a consolidation mode for three months now, without any significant breakouts or breakdowns. But within the index, there are significant up moves and down moves. Last one month alone saw a huge 20% cut in Nifty IT index following the Anthropic shock,” said Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments.
According to experts, the rebound in IT stocks is occurring alongside a boost in global tech sentiment following a recent rally on Wall Street, driven by increases in tech companies, which alleviated concerns about AI-induced upheaval.
Additional remarks from Anthropic suggesting a stronger emphasis on partnerships instead of completely replacing existing business models have also contributed to soothing investor anxiety.
Even with the recent upswing, analysts and market participants are still wary about the sector. Recent observations indicate that global investors are still underinvested in Indian IT stocks, with buying interest remaining selective instead of widespread.
Although the current recovery points to some bargain hunting and short-covering in large-cap companies, investors continue to pay close attention to how IT firms adjust their business models in response to an AI-driven productivity cycle, as per reports.
Harshal Dasani, Business Head, INVasset PMS, said that today’s rebound in IT stocks looks more like positioning and short covering rather than a structural shift in fundamentals. After a sharp correction driven by AI disruption fears, US discretionary spending cuts, and guidance downgrades, the sector had entered oversold territory on multiple technical indicators.
Further, Dasani explained that when positioning becomes extremely light and expectations are already reset lower, even a marginally positive global cue — whether from US tech earnings stability, softer bond yields, or a stable dollar — can trigger a tactical bounce.
However, Dasani believes that the core issues remain unchanged. Enterprise IT budgets in the US and Europe are still being reprioritised toward AI-led automation, cybersecurity, and cost optimisation rather than large-scale traditional transformation deals. Margins remain under pressure due to pricing resets and higher investments in AI capabilities.
“This rally should be seen as a relief move within a broader consolidation phase unless deal wins, revenue guidance upgrades, and clear AI monetisation visibility start improving. For now, it appears sentiment-driven rather than the beginning of a sustained earnings-led upcycle,” opined Dasani.
Technical Views
Nifty IT index today opened at 31,145.75 level, the indices touched an intraday high of 31,305.80, and an intraday low of 30,706.90.
Ruchit Jain, VP – Head of Equity Technical Research, Motilal Oswal Financial Services, said that post the recent fall in IT stocks, the momentum readings in most of the IT names are in oversold zone and it just seems a pullback move. The trend still remains weak and hence, it is advisable to keep a wait and watch approach and avoid bottom fishing.
According to Rajesh Bhosale, Equity Technical and Derivative Analyst at Angel One, Nifty IT witnessed a gap up opening, however, follow buying is missing in the opening trade, as most of the gains are wiped out as prices are trading at low point, crossing the bearish gap around 31,300 would be crucial only beyond which some recovery could be expected on the flip side, recent lows around 30,000 is immediate support.
Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decision.
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