Tata Consultancy Services, LTM Lead Crash In IT As Shares Fall Up To 8% After Recent Bull Run

Mumbai, June 3:The Nifty IT index slumped 4.5% on Wednesday, ending a three-session winning streak as investors rushed to book profits following a sharp run-up in technology stocks over the past week.

The sector, which had emerged as one of the market’s strongest performers amid optimism around artificial intelligence-led spending and improving global technology sentiment, witnessed broad-based selling across large-cap and mid-cap counters. The correction came despite supportive global cues from Wall Street, where semiconductor and AI-linked stocks had continued to advance overnight.

Market participants attributed the decline primarily to profit booking after the recent rally, with valuations becoming stretched in the short-term following a surge in share prices.

Heavyweights Bear the Brunt

Among frontline IT names, Tech Mahindra, Infosys and Tata Consultancy Services (TCS) were among the biggest losers, falling as much as 8% during the session.

TCS came under profit booking as shares crashed on the markets along with other IT names. Source: NSE

HCLTech, Wipro, LTM and Persistent Systems also traded lower, contributing to the weakness in the sectoral index.

At the time of writing, Tata Consultancy Services share price was trading 8% lower at Rs 2,252 while Infosys share price was down 4% at Rs 1,224.

LTM share price was also down 8% at Rs 4,013 as brokerage Jefferies said AI could impact traditional revenue by 25%.

LTM crashed as Jefferies warned of AI reducing traditional IT revenue by 25%. Source: NSE

The selling pressure was widespread, indicating investors were trimming positions across the sector rather than reacting to any company-specific development.

Over the previous three trading sessions, IT stocks had rallied sharply on expectations that sustained investments in artificial intelligence, cloud computing and digital transformation would support demand for technology services globally. The gains had also been aided by improving sentiment in U.S. technology stocks, a key driver for Indian software exporters that derive a significant portion of their revenue from North America.

Rally Pauses, but Outlook Remains Intact

Analysts said the decline appears to be a healthy correction following the sector’s recent outperformance rather than a sign of deteriorating fundamentals.

The Nifty IT index had gained around 7-8% over the preceding three sessions, significantly outperforming the broader market. Such sharp advances often attract short-term profit booking, particularly in large-cap stocks where institutional investors tend to lock in gains after rapid moves.

Investors also remain cautious ahead of upcoming economic data and commentary from major global central banks, which could influence expectations around technology spending and corporate IT budgets.

Despite the day’s weakness, sentiment toward the sector remains supported by expectations of steady demand for AI-related services, cybersecurity solutions, cloud migration and enterprise digitalisation projects.

Impact on Broader Markets

The decline in IT stocks weighed on benchmark indices, given the sector’s substantial weight in the Nifty 50 and Sensex.

Going forward, investors are likely to monitor global technology trends, U.S. economic indicators and management commentary from major IT companies for fresh cues. While the sector may remain volatile in the near term, analysts believe the longer-term growth narrative linked to artificial intelligence and digital transformation remains firmly in place.

Source:

• https://www.nseindia.com/get-quote/equity/LTM/LTM-Limited
• https://www.nseindia.com/get-quote/equity/INFY/Infosys-Limited
• https://www.nseindia.com/get-quote/equity/TCS/Tata-Consultancy-Services-Limited