Assessing Resilience in Indian Equities: Can IT and FMCG Stocks Rebound Amid Mixed Market Signals?

The Indian equity market has long been a battleground for sectoral performance, with the IT and FMCG sectors serving as bellwethers for macroeconomic shifts. As global demand wanes and domestic consumption patterns evolve, investors are scrutinizing whether these sectors can stage a near-term rebound. This analysis delves into the interplay of momentum, technical indicators, and market sentiment to assess their reversal potential.

IT Sector: A Tale of Stagnation and Strategic Reset

India's IT sector, once a poster child for global outsourcing, is grappling with headwinds. Brokerage forecasts for Q3 2025 paint a sobering picture: revenue growth is expected to hover around 6%, with profit growth at 5.5%, according to a Times of India report. Tata Consultancy Services (TCS), the sector's titan, is projected to see a mere 2% year-on-year revenue increase, a stark contrast to the 8% growth recorded in the same period in 2024, as noted in the Times of India report. Infosys and HCLTech, while slightly better, face similar constraints, with growth capped at 8% and 9.5%, respectively. Analysts attribute this stagnation to U.S. policy uncertainties and a global slowdown in digital transformation spending, as reported by StoryBoard18.

Yet, beneath the surface, the sector is undergoing a strategic reset. Q3 2025 saw a surge in M&A activity, with deals totaling USD 1.48 billion, as detailed in a Business Standard report. High-value acquisitions, such as Altimetriks' purchase of SLK Software and Wipro's expansion into cloud-native solutions, signal a pivot toward AI and automation, as highlighted in an HDFC Sky report. This consolidation suggests a long-term bet on scalability, even as near-term growth remains muted.

Technically, the Nifty IT index has shown mixed signals. While RSI and moving averages (50-day vs. 200-day) hint at potential oversold conditions, the lack of a clear Golden Cross-a bullish crossover of the 50-day and 200-day SMAs-leaves room for caution, as explained in a Trendlyne analysis. Traders are advised to monitor RSI crossovers with Bollinger Bands for refined entry points, as discussed in a TradingView script.

FMCG Sector: Rural Resilience and Niche Opportunities

In contrast, the FMCG sector has demonstrated surprising resilience. Rural markets, bolstered by government initiatives and rising disposable incomes, are outpacing urban areas. The dairy subsector, in particular, is a bright spot, with revenue growth projected at 13-14% in FY25, as reported by StoryBoard18. This is driven by robust consumer demand and an expanded raw milk supply, reflecting the sector's ability to adapt to shifting consumption patterns.

FMCG giants are also tapping into emerging niches. The pet food market, fueled by urbanization and rising pet ownership, is attracting significant investment, as noted by StoryBoard18. However, technical analysis of the CNX FMCG index reveals a mixed bag. Mcleod Russel India, a microcap player, has surged 116.25% year-to-date, outperforming the Sensex, as described in a Marketsmojo article. Yet, its RSI remains bearish on a monthly basis, while MACD and Bollinger Bands suggest short-term bullish momentum, as detailed in the Marketsmojo article. This duality underscores the sector's volatility and the importance of granular technical analysis.

Market Sentiment and Reversal Potential

The broader market sentiment is split. For IT, the focus remains on macroeconomic risks, with analysts warning that a rebound may not materialize until 2027, as reported by StoryBoard18. Conversely, FMCG's rural-driven growth and niche innovations offer a more optimistic outlook.

Technical indicators, however, tell a nuanced story. In IT, RSI Momentum Reversal strategies-where a 2-period RSI dips below 5-could signal short-term rebounds if prices stay above long-term moving averages, as outlined in a Medium article. For FMCG, the interplay of Stochastic RSI and EMA crossovers (e.g., 20-day vs. 50-day) provides actionable insights, as covered in a Moneycontrol analysis. Investors must weigh these signals against sector-specific fundamentals.

Conclusion: A Calculated Approach

The IT and FMCG sectors present divergent narratives. While IT's near-term prospects are clouded by global headwinds, its strategic pivot to AI and automation offers long-term promise. FMCG, buoyed by rural resilience and niche markets, appears more primed for a rebound-but with technical volatility to navigate.

For investors, the key lies in balancing macroeconomic caution with tactical technical analysis. In IT, patience may be rewarded as consolidation pays off; in FMCG, selective exposure to high-growth subsectors could yield outsized returns. As always, diversification and rigorous risk management remain paramount in this mixed-market environment.