Information Technology (IT) shares have been crushed down badly this yr. The BSE Information Technology (IT) index, down about 25 per cent (year-to-date) is the worst performing sector to this point. The index declined 15 per cent final yr as nicely and was the second worst performer. From the height of 45,792 made in December 2024, the index is down about 40 per cent.
In our Big Story, “Sectors to play in 2026”, written in January this yr, we had given a purchase within the BSE IT index. The index was then at 36,795 and we had forecast for a rally to 49,500 by the top of this yr. This view has gone unsuitable. The BSE IT index tumbled nicely past our stop-loss stage of 30,600 to the touch a low of 27,428 final month. It is at the moment at 27,648.74
Can the IT index fall extra? If sure, how far can it fall? Where can the index discover its backside? As an investor, is that this the best time to do a backside fishing or must you look forward to some extra time? Here is our take primarily based on technical evaluation.
On the charts
There isn’t any concrete signal of both a backside or a development reversal seen on the charts at the moment. However, there are some robust helps developing for the index. The first one is at 26,930, which is the 100-Month Moving Average (MMA). This will likely be an vital help to observe. Because in the course of the Covid market crash, the IT index discovered a backside simply above this 100-MMA.
The second vital help is within the 24,700-24,250 area. A trendline and the 61.8 per cent Fibonacci Retracement help are poised on this area.
Resistances are at 36,000 after which within the 39,500-40,000 area.
We are actually going to debate two attainable situations right here.
Firstly, now we have to see if the IT Index sustains above 26,930 (100-MMA) itself after which goes above 36,000 or not. If it does, then that may very well be an preliminary signal of reduction and an early indication of a development reversal.
Second situation will likely be if the index breaks beneath the 100-MMA help (26,930). In this case, there might be an prolonged fall to 24,700 or 24,250. For now, we don’t count on a fall past 24,250. There are good possibilities for the BSE IT index to discover a backside within the 24,700-24,250. This will likely be one other 12 per cent from the present ranges.
A powerful bounce from the 24,700-24,250 help zone and a subsequent rise above 30,000 will give a breather. Thereafter, an increase above 36,000 will give early indicators of a development reversal.
In each the situations, 39,500-40,000 goes to be a really essential stage to observe. Ideally, the BSE IT index has to rise above 40,000 to substantiate a development reversal and turn into convincingly bullish. Only then will the doorways open for a recent rally to 52,000-53,000 over the long run, that’s over the following two years or so.
So, as seen from the charts, it appears like a wait-and-watch state of affairs for now.
Log’s a unique image
The image on the log chart is fairly clear. The BSE IT index is now at a robust long-term help if we have a look at the log chart. Before we get into the small print, allow us to first see what a log chart is. Then we are going to see how vital it’s to make use of this log chart in technical evaluation.
So, right here we attempt to clarify what a log chart captures in easy phrases.
In a standard chart, absolutely the worth will likely be captured as it’s. For instance, assume that the BSE IT index strikes from 100 to 200 in January after which from 200 to 400 in February. On the candle chart, the scale of the January candle will likely be 100 factors (100 to 200) and that of February will likely be 200 factors (200 to 400). That is the scale of the February candle (200 factors) will likely be double that of the January candle (100 factors).
The log chart, however, captures the proportion change between two factors reasonably than absolutely the values. If we take the identical instance given above, the motion between 100 and 200 in January and 200 and 400 in February, each will likely be a 100 per cent transfer. So, if we plot a candle for these two months, then each will likely be of the identical measurement in a log chart.
Use of log chart
In technical evaluation, the log charts are used for analysing lengthy historic knowledge. It helps to establish the long-term development and make forecasts. Many a time, the log chart helps establish essential helps and resistances, and likewise main reversal factors, which can’t be noticed on the traditional absolute worth chart.
Any surprising excessive volatility available in the market induced as a result of a pure catastrophe (Covid) or geopolitical tensions are normalised when a log chart is used.
In technical evaluation, we use log chart along with absolutely the chart to get higher readability when the latter doesn’t provide you with a transparent image.
BSE IT index – Log chart evaluation
The outlook for the BSE IT index is strongly bullish, if we have a look at its log chart. There is a long-term trendline help at 27,400. Another help is 26,650. In addition to this, the value motion since 2008 signifies a bull channel. The index is now hovering above the decrease finish of this channel. So, from a long-term perspective, there are good possibilities for the BSE IT index to go up in direction of the higher finish of this channel within the coming years.
But given the present situation, such a robust rise could look unlikely, contemplating the basic components particularly given the AI disruption. But primarily based on the log chart, such an increase is a risk.
Given the present destructive sentiment, one attainable situation may very well be is that, the BSE IT index could run right into a sideways vary for a while. The buying and selling vary may very well be 26,500-40,000. Once the basic state of affairs improves, then perhaps the index could make a bullish breakout above 40,000 and go up in direction of 53,000 first after which to the higher finish of the channel within the coming years.
Interesting statement
If we evaluate the BSE IT index motion from 2009 to 2011 and 2020 to 2022, an attention-grabbing sample is popping out. The index bottomed at a low of 1,987.81 in February 2009 after which surged to a excessive of 6,921.41 in January 2011. Similarly, from a backside of 10,937 in March 2020, the index peaked at 38,713 in January 2022. In each cases, the index skyrocketed by about 250 per cent in about 22-23 months.
This yr in March, the index touched a low of 27,428 and is trying to bounce. If the identical sample that was seen earlier has to repeat, then the index can see a peak in January 2028. But the query is whether or not a 250 per cent surge is feasible. The reply may very well be NO, given the present basic background.
However, if one has to go purely by the charts, then that risk can’t be dominated out. So, we could should keep watch over this.
Divergence
The BSE IT and the NASDAQ Composite have at all times moved in tandem. But there was some divergence since 2025. The NASDAQ Composite index has surged 29 per cent since December 2024. The BSE IT index, however, has tumbled 36 per cent over the identical interval.
The NASDAQ Composite (24,837) index appears bullish for an increase to 27,000-27,500 within the coming months. If the present divergence between the 2 indices live on, then the rise in NASDAQ Composite index could not assist the BSE IT index to rise again. Conversely, if each begin to transfer collectively once more, then it may well assist the BSE IT index to revive.
We must wait and watch.
Conclusion
Combining all of the components mentioned above, there isn’t any concrete proof that the BSE IT index has already bottomed out.
The absolute chart signifies that there’s one other 8-12 per cent draw back left from right here. However, on the log chart, the index is already near long-term help. So, we advise traders enter this index in a staggered method.
Investing technique
Investors can think about investing 20 per cent of the meant capital at present ranges. Buy one other 30 per cent at 26,800. The steadiness of fifty per cent might be invested when the BSE IT index falls to 25,600.
The common entry on this case will likely be 26,370. Keep the stop-loss at 20,800. Trail the stop-loss as much as 28,800 when the index goes as much as 33,300. Revise the stop-loss larger to 34,600, 42,300 and 47,500 when the index goes as much as 38,800, 45,600 and 49,800 respectively. Exit the commerce and guide income when the index goes as much as 51,500
Now, what if the index reverses larger from round 26,500 itself and doesn’t fall to 24,700-24,250. One will miss out on the third entry stage of 25,600. In this case, traders must be prepared to purchase extra at larger ranges. The third entry might be cut up at 20 per cent at 32,300 and 30 per cent at 37,800. In this situation, the typical entry stage will likely be 31,370. The stop-loss, goal and different methods might be the identical as was talked about within the earlier case.
Investment choices
On the charts, the person shares and bellwethers like TCS, Infosys, HCL Technologies and Wipro will not be giving a transparent image to take a convincing funding determination. So, we advise traders go for different alternate devices which might be accessible available in the market.
There are many direct mutual fund (index funds) schemes and exchange-traded funds for traders who want to think about investing within the IT sector. Among the ETFs, Nippon India ETF Nifty IT, ICICI Prudential Nifty IT ETF and Kotak Nifty IT ETF might be thought-about.
Those searching for direct mutual fund schemes can search for ICICI Prudential Nifty IT Index Fund, Nippon India Nifty IT Index Fund and Axis Nifty IT Index Fund.
The ranges talked about within the funding technique above might be thought-about as a proxy for entry and exit from mutual funds or ETF.
There is at all times a danger of the forecast going unsuitable. So, strictly adhering to the stop-loss is a should.
Published on April 25, 2026