The analyst highlighted the index’s fall from a wedge pattern earlier this year but says the index has the potential to break past the resistance level

The Nifty IT Index has staged a strong recovery from recent lows near 33,000, but now faces a strong test at the key resistance zone around 39,000, according to SEBI-registered analyst Rajneesh Sharma.

At the time of writing, the index was at 38,770.30.

Sharma said that the current level is significant as it acted as a major horizontal resistance during the 2021 highs, when it rose as much as about 30%.

The current level also coincides with the zone where the index broke down from a rising wedge pattern in February-March 2025. The index eventually found support in the 32,000–33,000 range but has bounced back strongly since then.

Sharma believes the upcoming weekly close will be crucial in determining the index's next move, whether it will push through for a breakout or set up a bull trap.

Bullish breakout path

Sharma said a weekly close above 39,000 would mark a key technical breakout, clearing the 2021 resistance and negating the bearish outlook from the earlier wedge breakdown.

This could trigger strong momentum, pushing the index toward 42,000 and attracting renewed buying interest in IT stocks.

Bearish breakdown risk

Sharma believes that if the index cannot break above 39,000 and falls below 36,000, the recent rebound may be interpreted as a lower high in a continuing correction.

It increases the chances of a renewed downtrend, with the index potentially retreating to 33,000 or lower.

Consolidation

There’s also a possibility that the index may enter a consolidation phase between 36,000 and 39,000, Sharma said, adding that the range-bound movement could help the market absorb recent gains and gather energy for a more sustained move.

Year to date, the IT index has lost around 11% as of Tuesday’s close. 

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