The Nifty IT sector is going through a serious shake-up. As of today February 24, 2026, the index has fallen more than 21% in a single month — its worst monthly performance since the 2008 global financial crisis. So what’s causing this sudden collapse? And more importantly — what should traders and investors do now?
Let’s break it down in simple terms.
The AI Evolution
The Indian tech sector was already in pressure after Trump imposed restrictions on H-1B Visa. Now recently in the latest developments in AI, the AI startup Anthropic recently introduced a tool called “Claude Code” that can modernize legacy systems built on COBOL. Why is this a big deal? Because nearly 95% of US ATM transactions still run on COBOL, and modernizing those systems has been a long-term, high-margin business for Indian IT giants — and even IBM.
If AI can automate this process faster and cheaper, it threatens one of the most stable revenue streams for companies like TCS, Infosys, and HCLTech.
This fear has instantly hit the tech sector with IBM facing its worst single-day fall in 25 years (-13%) followed by Indian IT heavyweights
Investors are now questioning whether the traditional concept of managing services through which Indian tech giants earn the most is starting to weaken.
Important technical levels
Nifty IT today closed around 30000 level which can act as a psychological support. The 14-period RSI is in highly oversold region with a value around 15. That doesn’t mean the bottom is in. But it does increase the probability of a short-term “dead cat bounce” or relief rally.
Nifty IT has surpassed the standard 200 EMA daily with a huge margin. If it holds the current level of 30000 a temporary pull back can be seen.
Is it the best time to buy?
Nifty IT is making the biggest monthly candle of all times of around 10k in this sell off in the current February month. Even though the current level looks oversold, the fundamentals are not clear for the tech sector.
This can mean the beginning of some structural shift which can change how IT sector works and so catching a falling knife is not recommended.
This also means that most of the work can be done with AI in much faster pace and with less manpower and so the client won’t have to pay more per head. This reduces the gross profit of the IT services firms and hence the current evaluations are in danger. For now these are the visible assumptions but when the future possibilities of tech sector become clear, it might become easier to evaluate the best tech stocks to buy.
This isn’t just a normal correction, It’s a moment where technology disruption, global politics, and monetary policy are colliding at once. Markets are trying to reprice the future of the IT business model. That doesn’t mean the sector is finished. But it does mean that the old model of money making may be over — at least for now.