Bearish bets on local IT counters rise as AI scare scares investors

Mumbai: Traders have stepped up their bearish derivatives bets on India’s IT sector to all-time highs in recent times as global AI-related developments have raised questions over the prospects of software exporters and triggered a sharp sense of risk in the sector. While most IT stock futures see their biggest position builds in 2026, bearish bets in Infosys, Coforge and Persistent Systems are at all-time highs, according to SBI Securities.

The Nifty IT index has fallen more than 17% since February 3 after San Francisco-based AI company Anthropic announced the launch of its new automation tool, Claude Cowork, a move that raised fears about the growth trajectory of software companies.

According to SBI Securities, open interest (OI) or outstanding positions in large-cap IT equity futures have risen 39% as of February 20, compared to the average cumulative open interest between January 1, 2024 and January 31, 2026. The increase in mid-cap IT contracts is 70%.

“The huge rise in OI, coupled with the sharp fall in stock prices, implies an extremely short build in IT stocks,” said Sudeep Shah, Head of Technical and Derivative Research, SBI Securities.

The magnitude of rollovers in IT stock futures into March, when NSE’s February contracts expire on Tuesday, will give analysts a clearer picture of how traders are positioning themselves in the near term.

“If rollovers in the remaining two sessions approach previous levels, it will indicate significant rollover of short positions,” said Rajesh Palviya, Head of Technical and Derivatives Research at Axis Securities. The rollover of positions into the March series was 67% on Friday, compared to 96% at the previous expiration. Infosys has seen rollovers of 74.6% against 89.4% in the previous series, while in TCS it stands at 65.6% against 96.4% in the February series. The nervousness around IT stocks is palpable as the Nifty IT index closed lower in 10 of the 16 trading sessions in February. Shares of IT stocks are down between 11% and 19% so far this month. Coforge is down almost 19%, while LTIMindtree and Infosys are down about 18% each. A combined reading of derivatives indicators suggests a lack of investor interest in these stocks. “On days when IT stocks tried to recover, Open Interest did not rise significantly. This tells us that most of the upward moves were driven by short covering rather than new buying interest, or in other words, traders have not yet shown strong conviction to build new long positions,” said Dhupesh Dhameja, derivatives analyst at Samco Securities. Dhameja said sentiment remains cautious ahead of the monthly expiration. “The options data shows noticeable call writing at near-term resistance levels, indicating that traders expect limited upside potential in the near term.

There is put writing at lower levels, but this appears to be defensive and hedged in nature rather than aggressive bullish positioning,” he said. Shah advised against timing purchases in IT stocks as their technical structure remains weak for now. “It is prudent to wait for the IT index to stabilize and for clear signs of strong buying interest before planning new exposure,” he said.