TCS, Infosys to Coforge: IT stocks crash up to 9% after three-day rally; what's behind the selloff?
Indian IT stocks reversed a three-day rally as investors booked profits amid a broader market selloff, pulling the Nifty IT index down nearly 6% on June 3. All 10 constituents fell, led by TCS (-9% to ₹2,224.80) and LTIMindtree (-8%); Infosys, HCL Tech and Tech Mahindra fell 4–6%. Analysts cited valuations near historical averages and AI/rupee support, but warned demand and AI-driven pricing pressure remain key risks.
Infosys faces sector-driven selling pressure tied to valuation and FII flow concerns.
Infosys (Infosys) is listed among heavyweights down 4-6% as the Nifty IT index reverses after a three-day rally.
Moderately bearish near-term as investors book profits and wait for AI-led revenue evidence.
Background
Indian IT stocks had rallied ~7% over three sessions, supported by AI adoption commentary and a weaker rupee, before reversing sharply on profit booking.
Why it matters
The piece frames the selloff as valuation/positioning-driven rather than a new company-specific deterioration, with investors waiting for AI-led revenue replacement evidence.
Market relevance
For traders, the actionable signal is the abrupt reversal in Indian IT momentum and the renewed emphasis on FII flows and AI-driven pricing pressure.
Market effects
Signals renewed selling pressure across Indian IT services tied to AI-driven pricing compression risk and valuation/flow concerns.
Nifty IT index weakness (near -6%) can spill into broader India tech/IT sentiment and ETF/derivative positioning.
Reinforces the global ‘AI-linked earnings visibility’ preference versus Indian IT services, potentially affecting cross-border tech allocation.
Alternative perspectives
If AI adoption and rupee weakness continue to support reported results, the selloff could be an overreaction and create a better entry point after profit booking.
The article emphasizes AI-deflation risk but provides limited evidence on near-term deal wins or backlog trends; demand timing could differ by subsector and client mix.
Key entities
- indexNifty IT index
Near 6% decline on Wednesday; worst-performing NSE index as all 10 constituents fell.
- broker_noteKotak Institutional Equities
Cited for the view that tech spending increases may not translate to higher third-party provider spend.
- research_sourceMotilal Oswal Financial Services (via Fortune India)
Cited for data showing FII allocation to technology at an all-time low in the March quarter of 2026.
