Nifty IT index may to rally 40% by June 2027; how to play this theme at Dalal Street

Emkay Global Financial Services has highlighted a pronounced bullish outlook for the Indian IT sector following a comprehensive time-cycle analysis. According to Emkay Global, the Nifty IT index has completed both primary and secondary corrective phases, with historical trends indicating the potential for a sustained upside cycle extending until June 2027. The firm places a price target near 51,500, referencing similar uptrend durations observed since 2009, which typically span 20 to 22 months.

The recent 33% correction in the Nifty IT index, as noted by Emkay Global, falls within the historical pattern of past market movements. Each of the five major corrections since 2009, ranging from 30% to 35%, was followed by a strong rebound. The current scenario is marked by confirmation of a new primary uptrend, providing price-wise comfort for sector accumulation, particularly on dips of around 3%.

Emkay Global points out that the 50-month Exponential Moving Average (EMA)—a key trend navigator since 2012—has once again acted as strong support for Nifty IT. The index’s adherence to this technical indicator, coupled with a rounding bottom pattern on daily charts, has reinforced the bullish structure. Short-term corrections now present opportunities for accumulation, especially in the vicinity of 37,000 to 37,500.

From a relative performance perspective, Emkay Global observes that the Nifty IT/NASDAQ ratio is rebounding from the lower end of its long-term range. This development signals the potential for outperformance relative to global technology peers. Additionally, the Nifty IT/Nifty 200 ratio has completed a significant correction of approximately 42%, which in past cycles has led to sectoral outperformance.

Key IT sector competitors include large-cap Indian technology companies, with Emkay Global recommending exposure through ITBEES and select leading IT stocks that exhibit technical leadership. The firm’s strategy favours accumulation in these counters during minor pullbacks, leveraging historical price geometry and trend analysis to optimise sector allocation.

The broader implication of Emkay Global’s analysis suggests a positive outlook for long-term investors. The completion of corrective phases and the emergence of a bullish reversal pattern are likely to underpin investor sentiment and could stimulate renewed interest in IT sector equities over the medium to long term, according to the firm.

Emkay Global underscores that, given the technical confirmations and the established support zones, incremental declines—such as those approaching 3%—should be considered as buying opportunities within the sector. The firm’s view is grounded in observed market cycles and the technical resilience displayed by the Nifty IT index.