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Informist, Friday, Mar. 6, 2026

MUMBAI – Technical analysts see the Nifty IT index consolidating in a weak market next week. Investors are likely to sell these stocks if they see a rise in the short term, sectoral analysts said. While concern over artificial intelligence tools remains, domestic information technology services are likely to move up the value chain from effort-based execution to consulting-led strategic partnerships, brokerages said. Some analysts are of the view that following the AI disruption, companies will start including AI-related enhancements in their own offerings, helping to increase contract value and, consequently, margins. 

The traditional IT services model is under pressure as AI automates repetitive, high-volume tasks, Emkay Global Financial Services said in a report. In a low-growth environment, IT services companies are increasingly compelled to accept aggressive pricing, it said. While legacy work is being cannibalised, enterprise complexity is creating new growth opportunities, Emkay Global added.

The pace at which new services scale up relative to the decline in legacy work remains the biggest unknown, the broking firm said. While productivity gains are quick, AI transformation projects face long sales cycles, complex security approvals, and cultural resistance. The brokerage expects consistent performance from domestic IT companies, along with clearer disclosures on progress over the next few quarters, to gradually restore confidence in the business model.

Generative AI will still need IT services, Nuvama Institutional Equities said. The current disruption in IT services is likely to play out in a manner that is similar to earlier disruptions in the sector, it said, citing an industry expert. Enterprise clients will come to IT services companies for any generative AI implementation, the brokerage added. Unlike Emkay Global, Nuvama expects generative AI to lead to the reskilling of employees rather than to a large-scale reduction in their numbers. "Overall, we maintain that the Indian IT Services industry will come out stronger from the Gen AI disruption--with a net increase in its TAM (total addressable market)," the brokerage said.

Domestic IT stocks have been under pressure, declining alongside other stocks due to the market meltdown following the outbreak of hostilities between the US and Israel on the one hand and Iran on the other. AI-led disruptions and US discretionary spending cuts were also responsible for the decline. For the week ended Friday, the Nifty IT index ended 1.5% lower at 30138.40 points.

Some analysts said IT stocks have entered oversold territory, with the recent correction presenting a good buying opportunity. Others have indicated that the near-term structure remains weak. The Nifty IT is seen moving in a range with immediate support at 29800 points and resistance around 31300–31500 levels, Vipin Kumaar, derivatives and technical analyst at Globe Capital Markets, said. "Overall chart structure is weak; hence, we continue to maintain the sell-on-rise trading approach and expect it (the Nifty IT index) to test 28500 levels in the near term," Kumaar said. A bounce up to 31500–32000 levels is likely to attract sellers' interest, he added.

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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:

End

Reported by Eshitva Prakash

Edited by Rajeev Pai

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