BIG warning for IT stocks! Rally to end after 2,400-pts jump in Nifty IT? Anil Singhvi flags key danger zone

The Nifty IT index continued its sharp recovery on Wednesday, rising for the fourth consecutive trading session as investors returned to beaten-down technology stocks after a steep correction earlier this month.

The sectoral index rose 0.58 per cent to 29,478.90 in early trade. The latest rebound has helped the index recover nearly 2,401 points, or around 8.87 per cent, from its 52-week low of 27,078 touched on May 14.

IT Index Extends Recovery For 4th Straight Session

The rally has also made the Nifty IT index one of the strongest-performing sectoral indices in recent sessions. Over the past week, the index has gained 5.6 per cent compared with a 0.49 per cent rise in the benchmark Nifty 50 index.

Despite the recent recovery, the broader trend in the sector remains weak. The Nifty IT index is still down around 26.9 per cent from its 52-week high of 40,301.40 touched on March 2, 2026.

Data also showed continued underperformance over longer periods. The index has declined 6.67 per cent in one month, 7.89 per cent in three months and more than 20 per cent in six months. On a year-to-date basis, the sector is down 22.77 per cent, while its one-year decline stands at 20.93 per cent.

In comparison, the Nifty 50 has fallen 3.44 per cent in one month, 7.99 per cent in three months, and 10.18 per cent in six months. The benchmark index has declined 10.02 per cent so far in 2026 and is down 4.69 per cent over the past year.

Anil Singhvi Warns Of Profit Booking Near 30,000

Market expert Anil Singhvi said the recent rally in IT stocks could slow down as the Nifty IT index has entered a major resistance zone. According to Singhvi, positional investors with a one-to-three-month investment horizon should now remain cautious after the sharp recovery seen in the last few trading sessions.

He said the 29,600-30,000 range is emerging as a strong hurdle for the Nifty IT index, and profit booking could appear near those levels. Singhvi noted that the index has already rallied around 7 per cent in just three to four sessions and has played a major role in supporting the broader market during recent trading days.

However, he clarified that his caution is mainly for short-term and positional investors. The expert maintained that the long-term outlook on the IT sector remains constructive.

According to him, long-term investors can continue to stay positive on IT stocks due to the ongoing “reverse AI trade”, where Indian IT companies may gradually benefit if concerns around expensive global artificial intelligence-linked technology valuations begin to ease.

Technical Charts Indicate Strong Resistance Zone

Singhvi said multiple technical indicators are pointing towards a possible pause in the ongoing rally. One of the key reasons highlighted by him is a chart gap created during the sharp correction seen in April after negative global technology-related news impacted sentiment.

According to Singhvi, the Nifty IT index witnessed a major breakdown on April 24 and slipped sharply below an important support level. During that decline, a price gap was left near the 29,900-30,000 area.

He explained that such gaps often act as resistance zones whenever markets attempt to recover. The expert further said the Nifty IT index has repeatedly failed to cross this range during the past two months.

Between April 24 and May 19, the index reportedly approached the 29,600-29,900 zone four different times but reversed lower on every occasion. According to him, this repeated rejection at the same level shows that sellers are becoming active whenever the index approaches the 30,000 mark.

Recovery Has Already Reached Key Technical Levels

Singhvi also pointed to another important technical indicator supporting his cautious view. He said the Nifty IT index had fallen sharply from around 32,134 to nearly 27,700 within a month, marking a correction of nearly 16 per cent.

According to him, the latest rebound has already recovered almost 50 per cent of that entire decline, which is considered an important technical recovery level by market participants. Singhvi noted that the 50 per cent retracement level is coming near 29,600, which again matches the current resistance zone.

He further said the 50-day moving average of the Nifty IT index is placed near 29,700, making the 29,600-30,000 band technically significant from multiple perspectives.

The expert said the combination of resistance levels, repeated historical rejection and moving average resistance increases the possibility of near-term consolidation or profit booking in the sector.

What Investors Should Do Now

According to Singhvi, investors should avoid aggressively chasing the rally at higher levels until the Nifty IT index gives a decisive breakout above 30,000. He said a fresh and bigger rally in IT stocks would become more likely only if the sectoral index manages to close sustainably above that psychological mark.

Until then, Singhvi advised positional investors to consider partial profit booking after the recent sharp rise. At the same time, he said investors should not panic if the sector witnesses temporary weakness or correction in the near term.

Instead, he suggested that any healthy decline could provide another opportunity to accumulate quality IT stocks at better valuations. “Whenever everyone becomes too excited after a sharp rally, investors should become slightly cautious,” Singhvi said while explaining the current market setup.

The market expert added that investors should remain flexible instead of taking completely bullish or bearish positions. According to him, successful investing often involves buying during periods of fear and becoming cautious when excessive optimism returns to the market.