What It Means
A technical rejection is what happens when the IPO registrar throws out your application before the allotment draw even runs, because of a procedural problem rather than bad luck in the lottery. A duplicate PAN, a name mismatch between your PAN and bank account, or an unapproved UPI mandate are the usual causes.
How It Works
It helps to separate two outcomes that both feel like "I didn't get shares." Losing the lottery means your application was valid, entered the Draw of Lots along with everyone else's, and simply wasn't picked, which is common in an oversubscribed IPO. A technical rejection means your application never made it into the draw at all. The money blocked through your UPI mandate gets released back to you either way, so the rejection doesn't cost you money, but it does cost you the shot you thought you had.
Example
Someone applies for the same IPO from three demat accounts held in their own name. Since all three trace back to the same PAN, the registrar's de-duplication check catches the repeat and technically rejects all three, including the one that would have been perfectly valid if they'd stopped at one application. See the full breakdown in Applying for IPO from Multiple Demat Accounts.
Warning
A technical rejection isn't the same as losing the lottery. Checking your IPO status and seeing "rejected" instead of "not allotted" means the application was disqualified before the draw ran.