The Nifty IT Index was among the worst-performing sectoral indices on Monday, 8 June, down 2%. The decline was primarily driven by sharp losses in heavyweight IT stocks as investor sentiment remained subdued amid global macroeconomic uncertainties
IT shares faced downward pressure following a widespread selloff in global tech stocks. On Friday, Wall Street experienced a significant downturn, with the Nasdaq dropping 4.2%, representing its largest single-day decline since April 2025. The Philadelphia Semiconductor Index also suffered its largest one-day decline since March 2020, losing over $1 trillion in market value.
This downturn weighed on Asian markets on Monday, especially technology-focused indices. South Korea’s Kospi fell by 5%, Japan’s Nikkei dropped nearly 4%, and Taiwan’s main index declined by around 4% as investors took profits from semiconductor and AI-related stocks that had driven the recent global market surge.
“The rotation thesis is real, but selective. The Broadcom-triggered sell-off has exposed the fragility of hyper-concentrated AI markets in Korea and Taiwan. The Dow-vs-Nasdaq divergence on the same day confirms this is a rotation, not a panic. India is structurally under-owned, FPIs are underweight, and now sees early green shoots of inflows, making it a logical destination.
The play is not broad-based but concentrated in domestic financials, consumption, and infrastructure sectors with genuine earnings recovery visibility in FY27. The full rotation trade requires the AI sell-off to deepen and stabilise, not just spike and bounce. Watch the Nasdaq, FPI daily flow data, and the rupee trajectory as the three leading indicators,” said Khushi Mistry, Research Analyst at Bonanza.
Among the losers, led the decline, tumbling 6.46% to ₹185.55 after witnessing strong selling pressure. slipped1.47% to ₹2,166.50, while lost 0.28% to ₹1,431.50. Infosys remained largely subdued, declining 0.11% to ₹1,196.20.
On the other hand, a few IT stocks bucked the weak trend and ended higher. was the top gainer in the index, rising 1.25% to ₹1,502. Mphasis gained 0.86% to ₹2,350, while Persistent Systems advanced 0.33% to ₹5,055. LTIMindtree and OFSS also posted modest gains of 0.10% and 0.09%, respectively, helping limit the overall decline in the Nifty IT index.
IT sector faces near-term growth challenges despite attractive valuations
Sunny Agrawal, Head of Fundamental Research at SBI Securities, said the fundamental outlook for the IT sector remains largely unchanged, with concerns around artificial intelligence (AI) and its deflationary impact on traditional IT services continuing to weigh on growth prospects. He noted that most Tier-1 IT companies have guided for low single-digit revenue growth in FY27, while several Tier-2 and Tier-3 firms are expecting only low double-digit growth, reflecting the industry’s cautious outlook.
According to Agrawal, the recent rebound in IT stocks was primarily a technical recovery following a sharp valuation correction. Many IT companies are currently trading below their long-term valuation averages, and the sector also benefited from short covering amid a lack of compelling opportunities elsewhere in the market. However, Monday’s decline appears to be driven by profit booking amid persistent concerns over future growth.
He pointed out that while the sector continues to face structural challenges, Indian IT companies are actively adapting by partnering with global AI leaders and offering bundled AI-enabled solutions to clients. These initiatives could help expand their addressable market and offset some of the pressure on traditional IT services businesses. However, Agrawal believes the financial benefits of these investments are more likely to become visible from FY28 onwards rather than in FY27.
Despite the subdued growth outlook, he believes the sharp valuation correction has made the sector more attractive, with free cash flow yields now offering some downside protection. Agrawal expects the IT sector to remain range-bound and consolidate over the next one to two quarters. Over the longer term, he expects a handful of companies to emerge as winners, particularly those that gain an early advantage in delivering differentiated AI-led solutions and are able to grow faster than the industry average. Such firms are likely to attract stronger investor interest and outperform their peers, though he cautioned that it may take another 2 to 3 quarters before there is greater clarity on which companies will emerge as leaders in the AI-driven transformation of the sector.
Technical Views
Sudeep Shah, Head of Technical and Derivatives Research at SBI Securities, said the Nifty IT Index has corrected nearly 8% from its recent high of 31,291 recorded on 2 June, indicating a deterioration in the sector’s technical setup. He noted that the index has slipped below its key short- and long-term moving averages, reflecting a weakening trend.
According to Shah, momentum indicators have also turned negative, with the daily Relative Strength Index (RSI) falling sharply from 66 to 46, signalling a significant loss of strength. Meanwhile, the weekly RSI remains below 40, highlighting an underlying weak bias. He further pointed out that the DI- line is on the verge of crossing above the DI+ line on the ADX indicator, suggesting that sellers may be regaining control of the trend.
Shah believes the 20-day exponential moving average (EMA) zone of 29,230–29,250 will act as immediate resistance. As long as the index trades below this zone, he expects the Nifty IT Index to maintain a sideways-to-bearish bias in the near term.
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