Nifty IT index tanks 3,000 pts in last five sessions; should you 'sell on rise' ?

IT stocks have witnessed a huge sell-off in the last five sessions with the Nifty IT index plunging over 3,000 pts or 9.13% on concerns over AI disruption fears and Trump tariffs. With the IT shares sell-off, the Nifty IT index has crashed 20.67% in 2026. Shares of major IT firms such as Wipro, Infosys and TCS plunged to their 52 week lows in the previous session after leading AI research firm Anthropic in its blog post revealed how its "Claude Code" tool can be used to modernise software written in COBOL - the decades-old programming language that handles large-scale batch transactions across critical industries.

Another factor that weakened sentiment on Dalal Street is Citrini Research's latest note titled “The 2028 Global Intelligence Crisis,”. The note outlined a scenario in which contract cancellations at Tata Consultancy Services Ltd, Infosys Ltd and Wipro would accelerate through 2027. 
 
IT stocks were the biggest losers with Nifty IT index plunging 1675 points or 5.3% to a fresh 52 week low of 29,875. On similar lines, BSE IT index hit a fresh 52-week low of 29,081, crashing 1,546 pts intra day on Tuesday.

Jefferies has downgraded six Indian IT stocks citing risks as the industry requires a change in operating model. According to the brokerage, artificial intelligence may structurally change the IT business mix towards consulting and implementation while shrinking managed services.

Jefferies downgraded Infosys to 'hold' and slashed target price by 31% to Rs 1,290. The brokerage downgraded HCL Tech to 'hold' and cut target price by 26% to Rs 1,390

Tata Consultancy Services was downgraded to 'underperform' and its target price trimmed by 33% to Rs 2,350. Jefferies also downgraded LTIMindtree and Hexaware Technologies to 'underperform' and cut their price targets by 30% each to Rs 4,300 and Rs 460, respectively. Mphasis was also downgraded to 'hold' and target price cut by 28% to Rs 2,450.

However, in the current session, the Nifty IT index surged 665 pts to 30,719 in early deals amid a relief rally in benchmark indices.  IT stocks led the gainers in the current session on value buying and positive global cues.

VK Vijayakumar, Chief Investment Strategist, Geojit Investments cited FIIs turning buyers in February after a long time as a key factor behind today's recovery.

“The negative factor of sustained selling in IT stocks may be over and there is a possibility of some rebound in the segment. News of Anthropic’s Claude chatbot building partnership in software and services with IT firms  indicate that there will be collaboration opportunities for Indian IT firms,” Vijayakumar said.

But it could be a temporary relief from the brutal correction in  IT stocks.

On Tuesday, San Francisco-based startup Anthropic unveiled new plug-ins that it claimed could help with investment banking tasks like reviewing deals, wealth-management tasks such as portfolio analysis and human resource-related tasks such as making new-hire materials reflect a brand’s tone and policies.

Sachin Gupta, VP – Research at Choice Broking said instead of 'buy on dips' approach, investors can now shift 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," said Gupta.

Anand James, Chief Market Strategist, Geojit Investments is not upbeat on the prospects of IT stocks.

"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 30300 intraday, and at 31300 on a closing basis, with further resistance seen at 36200 for the Nifty IT index, which closed at 31550.5 on Monday," said James.