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Informist, Friday, Feb. 20, 2026

 

MUMBAI – Information technology stocks are expected to consolidate next week after their recent slump. The negative bias, however, is expected to persist in the near term amid fears of disruptions to the IT services business due to the adoption of artificial intelligence. Fading hopes of a US Federal Reserve interest rate cut in 2026 and sustained pressure from foreign institutional investors rapidly exiting domestic IT stocks further add to the negative sentiment, analysts said. 

Minutes from the Fed's January meeting, released on Wednesday, showed officials setting a higher bar for additional rate cuts in 2026. Policymakers emphasised the need for more evidence that inflation is moving sustainably toward the bank's target and acknowledged that monetary policy may need to remain restrictive for some time if price pressures fail to cool. Investors will now focus on the US personal consumption expenditures report, the Fed's preferred inflation gauge, scheduled for release later in the day, for cues on the central bank's rate trajectory. 

 

Friday, the Nifty IT index closed 1% lower at 32004.05 points, with all constituents barring Tata Consultancy Services ending the session in the red. Over the week, the IT index fell by over 2%, closing in the red for the third straight week. Next week, the sectoral index is seen finding support at 31000–30000 points and resistance at 32500–32700 points, according to two technical analysts.

 

So far this month, the Nifty IT index has shed nearly 16% amid fears of revenue deflation in services owing to adoption of AI solutions. Large cap players such as Infosys, Tech Mahindra, Tata Consultancy Services, Wipro, and HCL technologies have dropped 11–18% so far this month. In comparison, the benchmark Nifty 50 and the BSE Sensex have risen 0.7–1.0% in this period.

 

"The concerns are due to the rapid pace of development of frontier GenAI models and agents, especially in software engineering and the assumption that improvement in capabilities is generalisable to other IT services segments," Kotak Securities said in a report. The brokerage, however, believes that the markets are discounting AI-led disruption far more than current evidence supports. "The risks are understandable, though overstated. Deflation (revenue deflation due to AI-led disruption), in our view, can also coexist with healthy enterprise tech spending," Kotak said. 

 

"It is difficult to quantify the real impact of AI on IT Services business, as the timing of potential headwinds from AI-led productivity gains and tailwinds from modernisation and new AI-led spending remain uncertain at this stage of the cycle," Emkay Global said in a report. The brokerage expects IT services companies' roles to evolve and their business models to shift toward an outcome-based model, away from the current predominantly input- or effort-based model. 

 

Enterprise systems are complex and adoption is expected to remain gradual. IT services companies have the advantage of contextual understanding of enterprises' complex environment, domain knowledge, and client's trust; hence, they would remain relevant even in the AI era, Emkay Global said. A durable recovery is expected to take time and would depend on delivering consistent earnings, its said. 

 

When it comes to engineering and research and development players, ICICI Securities expects them to be better placed to face AI-led disruption, given their deeper moats, driven by high-stakes offerings and lower repetitive coding requirements. A higher mechanical engineering revenue mix, which had been an impediment earlier, could now act as a moat against AI-led automation, the brokerage said in a report. Within the ER&D space, it prefers Cyient and Tata Technologies given their higher mechanical engineering components. Further, ER&D companies that pivot towards data centre engineering and AI-led infrastructure like L&T Technologies are expected to emerge as survivors in the AI race, ICICI Securities said.

 

TOP HEADLINES

 

* Intellect Design launches Purple Fabric-powered Academic TeamSpace
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* Gates Foundation to launch 'Advantage India for AI' to aid social good
* India must move from tech svcs to intellectual property, says HCL Tech chief
* LTIMindtree partners with Indian Institute of Creative Technologies
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* AI a turning point for human civilisation, need to keep vision big - PM Modi
* Tata group, OpenAI partner to advance AI transformation in India, globally
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* Minister Goyal says disconcert in market over future of IT cos "ridiculous"
* Netweb Tech launches AI supercomputer, computing systems powered by Nvidia
* IT industry headcount may fall in next 1-2 yrs, says Infosys Gopalakrishnan
* Infosys unveils AI-first value framework to tap AI opportunities in mkt
* To up compute capacity, add 20,000 graphic process units - Minister Vaishnaw
* Hexaware, Replit launch open version of AI-led software platform RapidX
* Minister Vaishnaw sees over $200 bln AI infra invest in India in next 2 yrs
* Intellect Design, Adrenalin eSystems jointly launch AI-powered HR TeamSpace
* Infosys partners with Anthropic to develop advanced enterprise AI solutions
* TCS arm, AMD partner to co-develop rack-scale AI infrastructure
* Micron Tech to begin commercial production in India by Feb-end, says IT secy
* SC refers pleas vs data protection Act, Rules to larger bench, refuses stay
* Sagility appoints Srinivas Rathnam Mattapalli as group CFO effective Sat
* CE Info Systems Oct-Dec consol sales fall 17.7% QoQ but PAT rises 1.4%
* NCDEX partners TCS for planned foray into equity segment in 10-year deal
* Brainbees Solutions consol net loss widens YoY to INR 284.34 mln in Oct-Dec
* Earnings Review: Info Edge Q3 PAT down sharply QoQ on high base; misses view
 

Following are the resistance and support levels for key IT stocks for next week as per calculations based on their prices on the National Stock Exchange:

 

Company	Price	Week-on-week  change in %	Resistance	Support
COFORGE LTD	1340.60	(-)1.60	1397.30	1290.50
HCL TECHNOLOGIES LTD	1436.50	(-)1.30	1464.80	1416.80
INFOSYS LTD	1353.20	(-)1.20	1378.90	1325.30
L&T TECHNOLOGY SERVICES LTD	3396.60	(-)3.20	3472.30	3328.50
LTIMINDTREE LTD	4889.50	(-)4.40	5003.80	4804.80
MPHASIS LTD	2373.80	(-)3.40	2446.50	2284.90
PERSISTENT SYSTEMS LTD	5092.00	(-)7.10	5349.30	4941.30
TATA CONSULTANCY SERVICES LTD	2686.20	(-)0.20	2733.90	2623.70
TECH MAHINDRA LTD	1456.90	(-)5.10	1486.60	1438.20
WIPRO LTD	209.86	(-)2.00	213.70	206.30
Index	Levels
NIFTY IT	32004.05	(-)2.10	32584.60	31514.50
NIFTY 50	25571.25	0.40	25822.00	25254.40
BSE SENSEX	82814.71	0.20	83643.50	81791.80

 

End

 

Reported by Arya S. Biju

Edited by Saji George Titus

 

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