Are NIFTY IT, INFY and TCS set for a bullish reversal? Here's what the charts show

The NIFTY IT index has witnessed a significant recovery after finding support in April 2025, following a sharp decline of 33% from mid-December. The April 2025 level coincides with the June 2024 low, indicating a strong support. The index has since recovered over 50% of its losses. In the process, it has formed a bullish reversal pattern supported by other indicators suggesting optimism.

Let's look at what the NIFTY IT charts are saying.

On the monthly chart, the NIFTY IT took support at the 30,919 level in April 2025, after falling nearly 33% from its peak at 46,089 in mid-December 2024. The fresh support is almost at the same level as the low of June 2024. Since then, the index has recouped more than 50% of the aforementioned fall. So far in June, the index is up over 4.5%.

Nifty IT index (Monthly chart)

On the daily chart, the NIFTY IT index has formed an Inverse Head & Shoulders (H&S) pattern. As seen in Figure 2, an Inverse H&S is a bullish reversal pattern that signals a potential shift from a downtrend to an uptrend. Moreover, a breakout of the neckline—a trendline formed by joining two high points between the shoulders and the head—signifies strong buying momentum.

In the NIFTY IT index, the breakout of the neckline occurred on 11 June around the 38,400 level. Following a retesting of the neckline, the index has bounced up sharply.

Additionally, the 14-period RSI has also crossed the 65 mark, indicating a strong upward momentum. Also, the index is trading above its three major EMAs (50, 100, and 200) which suggests an uptrend.

Now, let's see what the charts of the top IT companies are depicting.

Infosys and TCS, which collectively account for nearly 50% of the weightage in the NIFTY IT index, have shown similar price action on the charts. However, both these stocks are trading at the neckline level and have yet to cross that level.

The neckline, i.e. the breakout of the Inverse H&S, for Infosys is around the 1,640 level. A neckline breakout with supportive indicators like volume and RSI typically signals a bullish trend on the charts.

Similarly, the neckline of the H&S in TCS is around 3530.

Currently, the strengthening USD/INR is a positive indication for the Indian IT sector in general. However, the upcoming Q1 results starting in July will hold the key to the movement of stock prices of the IT stocks.