Summary:
TCS shares recorded their steepest single-day decline in six years, falling more than 8% and dragging the Nifty IT index lower. The selloff was driven by profit booking after a strong AI-led rally, weakness in global software stocks, and brokerage downgrades. The sharp correction also impacted Infosys, HCLTech, Wipro, and other major technology stocks, weighing on the broader market.
Tata Consultancy Services (TCS) shares witnessed their sharpest decline in 6 years on June 3, dragging the entire IT sector lower and snapping the recent rally in technology stocks. The stock plunged over 8% during morning trade, emerging as the biggest loser on the Nifty 50 index, while the Nifty IT index tumbled as much as 4.5%.
TCS Shares Fall Over 8%, Erasing Recent Gains
TCS shares dropped more than 8% to ₹2,247, marking their steepest single-day decline since March 12, 2020. The sharp correction came after the stock had gained more than 6% over the previous two trading sessions. With Wednesday’s selloff, TCS erased all its recent gains and slipped below levels seen last week.
The stock also touched a nearly four-month low, reflecting the broader weakness across the technology sector.
Nifty IT Index Snaps Strong Rally
The Nifty IT index declined over 4% in early trade, ending a powerful rally that had seen the sector surge nearly 8% over the previous two to three sessions. At around 10:10 am, the index was trading 4.5% lower at 29,690.2.
The correction was broad-based, with major IT stocks witnessing heavy selling pressure. Infosys fell nearly 5%, Tech Mahindra dropped around 4% to 5%, while HCLTech declined about 3.8%. Wipro, Persistent Systems, Coforge, LTIMindtree, Mphasis and KPIT Technologies also traded lower by 2% to 7%.
Profit Booking After Sharp Rally
Market participants attributed the selloff primarily to profit booking after the recent sharp rally in IT stocks. The sector had witnessed strong gains after optimism around artificial intelligence spending and supportive comments from Nvidia CEO Jensen Huang during the GTC Taipei Keynote at COMPUTEX 2026.
However, after an 8% rise in just a few sessions, investors chose to lock in profits, triggering a sharp reversal in technology counters.
Global Software Stocks Trigger Weak Sentiment
Weakness in global software stocks further weighed on sentiment. The rally in international technology shares driven by expectations of rising AI-related spending lost momentum, resulting in significant declines across major software companies.
The iShares Expanded Tech-Software Sector ETF fell 3%, wiping out nearly half of the 6% gain recorded a day earlier.
Among major global software stocks, Atlassian plunged 8%, while HubSpot and Okta fell 7% each. ServiceNow and Intuit dropped 6%, while Rubrik and Workday declined 5%. Microsoft, Salesforce, Oracle, Datadog, Cloudflare and Palantir also fell between 3% and 4%.
Accenture shares slumped 7%, touching an intraday low of $183.41 compared to the previous close of $196.59. Gartner, Cognizant Technology Solutions and EPAM Systems also witnessed significant selling pressure.
Brokerage Downgrades Add Pressure
The weakness intensified after several brokerages reportedly downgraded software stocks and reduced target prices. The American Depository Receipts (ADRs) of Infosys and Wipro fell as much as 8% on Wall Street, reflecting growing caution among global investors toward the technology sector.
Fresh Bearish Positions Seen In IT Stocks
Derivatives data indicated aggressive fresh short positions across the IT pack. TCS, Infosys, HCLTech, Wipro, Persistent Systems, Coforge, LTIMindtree and KPIT Technologies featured prominently on the fresh shorts list.
The concentration of new bearish bets across multiple technology names suggested traders expect continued near-term weakness in the sector despite the recent AI-driven optimism.
Nvidia’s AI Optimism Fails To Sustain Rally
The correction comes despite positive remarks from Nvidia CEO Jensen Huang earlier this week. Speaking at the GTC Taipei Keynote during COMPUTEX 2026, Huang stated that Indian IT companies are well-positioned to benefit from AI implementation.
He dismissed concerns that artificial intelligence would make traditional coding obsolete and argued that AI would create one of the biggest growth opportunities ever for software companies rather than replacing software development.
Despite those encouraging comments, investors remained focused on near-term valuation concerns, global software stock weakness and profit booking pressures.
IT Stocks Drag Markets Lower
The weakness in IT shares significantly impacted the broader market. The Nifty 50 fell 0.8% to 23,290.45, while the BSE Sensex declined over 700 points, or around 0.9%, to 73,297.
All major sectoral indices traded in the red, with the IT sector emerging as the biggest drag on benchmark indices. TCS, Infosys, Tech Mahindra and HCLTech were among the top losers on the Nifty 50, highlighting the sharp reversal in sentiment across the technology space.
The selloff marks the biggest single-day decline for the Nifty IT index since April 25, 2026, underscoring the intensity of profit booking after the sector's recent AI-fuelled rally.
