Bears Dominate IT Sector Stocks as Nifty IT Index Plunges 10,000 Points from February Peak Amid Concerns of AI Disruption

Nifty IT Index Plunges 26% as AI Disruption Fears Mount

The Nifty IT index has been the major loser among sectoral indices, underperforming the benchmark Nifty 50 index by plunging 26%, or over 10,000 points, from its February 2026 peak. This decline is largely driven by fears of Artificial Intelligence (AI)-led disruption putting pressure on domestic IT names. In contrast, the Nifty 50 fell nearly 4% during the same period.

Technical Analysis

The Nifty IT index has traded below all key moving averages (20, 50, 100, and 200 EMAs) on both daily and weekly timeframes, with downward-trending moving averages on monthly charts. It has also traded below the lower Bollinger Bands on weekly and monthly timeframes, indicating bears are in control.

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Momentum Indicators

Momentum indicators have maintained a sell signal and consistently shown the Nifty IT index in oversold territory. However, experts do not expect a pause in selling, with a potential decline towards the 28,000-27,000 levels in the short term.

Market Sentiment

Markets fear that new enterprise tools, such as Anthropic's Claude Code, Palantir AIP, and Anysphere's Cursor, may impact the revenue models of traditional Indian IT companies. Global clients are expected to continue recalibrating discretionary spending amid AI-led cost optimization and macroeconomic caution in the US and Europe.

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Market Expectations

Large-cap IT companies are likely to face slower deal conversion cycles and pricing pressure as enterprises prioritize efficiency over expansion. The current correction or volatility in AI-linked trades should be seen as a normal phase in price discovery rather than a collapse of the theme itself.

Key Levels

• Intermediate support: 29,000-28,700
• Sacrosanct historical support level: 27,000
• Breakdown neckline: 32,000-32,500