IT shares on course for their worst month since 2008: Is the sector in oversold territory? Experts say this

markets

• Sensex and Nifty fell over 1 percent, led by IT stock declines.
• Nifty IT index dropped 6 percent, steepest fall since 2008 crisis.
• AI disruption fears and weak global cues hit Indian IT shares.

Did our AI summary help?

The equity benchmark indices Sensex and Nifty fell more than 1 percent on Tuesday, dragged down by heavy selling in information technology (IT) shares amid concerns over artificial intelligence-led disruption and renewed trade-related uncertainties.

The decline in IT shares followed global concerns around artificial intelligence after the launch of enterprise tools such as Anthropic’s Claude Code. Market participants fear that generative AI tools could begin impacting traditional Application Development and Maintenance (ADM) revenues, a key revenue stream for Indian IT firms.

According to Sachin Gupta, Vice President – Research at Choice Broking, the Nifty IT index entered a clear bearish phase in February 2026 after correcting nearly 21 percent.

"The Nifty IT index slipped into a clear bearish phase in February 2026 after correcting nearly 21 percent. The decline gathered pace when the index broke down from a Head and Shoulders pattern on the weekly chart — a classic signal of a structural trend reversal. The fall dragged the index below its crucial 10-month low of 30,918, confirming that the broader trend has turned weak," he said.

Gupta further said the index has breached the 61.8 percent Fibonacci retracement level and witnessed a negative crossover of key moving averages, known as a ‘Death Cross’.

"This suggests that the earlier ‘buy on dips’ approach has now shifted to a ‘sell on rise’ strategy. With the index struggling to sustain even short-term pullbacks, the technical structure points to further downside toward the 29,300–28,700 support zone. A meaningful recovery is unlikely unless a strong global trigger — particularly stability in the Nasdaq — helps improve overall sentiment," he added.

Nifty IT index crashes over 5% as Anthropic’s AI claims fuel disruption fears; TCS, Infosys among top losers

Anand James, Chief Market Strategist at Geojit Investments Limited, said that while oscillators had moved into oversold territory and some positive divergence was visible in recent sessions, Tuesday’s decline has weakened the near-term outlook.

"Oscillators being oversold, and with some of them showing positive divergence, recovery signs were beginning to be visible in the last few days. However, with today’s slippage, we are below the February 13 reaction low of 31,422 with momentum indicators favouring further slide. Standard deviation studies point to 29,961 as the nearest support below, with further major support seen at 28,800 and 27,200, in the event of a collapse. Upside reversal level is seen at 30,300 intraday, and at 31,300 on a closing basis, with further resistance seen at 36,200 for the Nifty IT index, which closed at 31,550.5 on Monday," he said.

The Nifty IT index has declined over 9.4 percent in the past one week and more than 21.6 percent in the last one month.

With Tuesday’s 6 percent fall, the index has dropped over 21 percent in February so far, marking its steepest monthly decline since the 2008 global financial crisis, according to an ET report.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.