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Informist, Friday, Aug. 14, 2026

MUMBAI – Information technology stocks are expected to be volatile in the near term as investors focus on uncertain inflation trends and the unstable artificial intelligence trade. The AI trade, the strongest undercurrent in the IT sector globally, has confused analysts about whether the next leg will spark further unwinding or whether bullish bets will resume.  

"I think the problem is (with) the valuations (of IT companies), which are still quite large compared to Accenture (the largest IT services company by market capitalisation)," an analyst at a medium-sized domestic brokerage said. IT companies have mirrored developments around AI for several months and will likely continue to do so. "What had investors afraid was that IT companies will have lower contract wins due to AI tools, but that fear has not fully materialised as they (IT companies) have indicated strong AI revenue growth," he said.

However, the analyst added that "IT stocks will see some more pain" before they can turn the sizeable opportunity of AI contracts into a consistent growth lever. He advised a stock-specific approach to trading and suggested purchasing medium-sized stocks over large caps. While IT stocks have benefited from the popularly dubbed "anti-AI trade," this does not reflect the mixed financial performance of IT companies in the June quarter. Investors are also exercising further caution, as the ongoing war in West Asia will likely hit IT companies' bottom lines in the September quarter. Nuvama Institutional Equities said demand trends remained largely unchanged in the June quarter, with healthy execution of existing deal pipelines offsetting a cautious discretionary spending environment.

This week, the Nifty IT index ended 0.6% lower at 31357.75 points. Going ahead, investors will track the US Federal Reserve's July meeting minutes and US crude inventory data. India's infrastructure output and August flash Purchasing Managers' Index readings later in the week will also be in focus.

The Nifty IT index has been consolidating around the key resistance level of 32000 for the past two weeks. A sustained move below 30900 on a spot could drag it down toward 30000–29500 points in the near-term, Vipin Kumar, assistant vice president – research at Globe Capital Market, said. Conversely, a decisive close above 32000 could propel the index up to 33500–33800 on spot levels.

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The 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 Saji George Titus

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