Indian IT sector stocks Tata Consultancy Services, Wipro, Infosys continued to fall on Thursday, 4 June amid ongoing amid the ongoing artificial intelligence (AI) buzz, concerning investors about the sector’s future growth prospects.
Tata Consultancy Services () share price fell nearly 1% to ₹2,216 apiece on NSE, after witnessing worst single day fall of 9% since early 2020 in the previous session.
Infosys share price also plunged 1.21% to ₹1,207.80 per share. Meanwhile, share price dropped over 0.50% to ₹204 apiece on Thursday.
Other IT stocks also witnessed similar downward movement. Coforge declined 2.1% to ₹1,391, while Mphasis slipped 1.9% to ₹2,245. HCLTech fell 1.8% to ₹1,158, and LTIMindtree dropped 1.3% to ₹4,000. In contrast, Tech Mahindra outperformed its peers, gaining up to 1.3% to ₹1,491.
Nifty IT index also continued its losing streak, falling over 0.53% to 29,274. The index tumbled nearly 6% on Wednesday, recording its sharpest one-day decline since at least 2020, as every constituent ended in the red with losses ranging between 3% and 9%.
Anshul Jain, Head of Research at Lakshmishree, said that the IT Index continues to trade within a broad consolidation range, with key support placed between 28,288 and 28,677 and resistance near 32,134.
Why IT stocks are falling?
According to Harshal Dasani, Business Head at INVasset PMS, the weakness in the IT index extends beyond concerns over AI disruption.
Dasani noted that while AI may have acted as the immediate catalyst, the broader issue is that sector valuations have yet to fully account for slowing growth.
He described the sharp decline as the market signaling that the recent recovery was “more of a dead cat bounce than a genuine trend reversal.”
Dasani noted that when a sector is delivering only low single-digit growth but continues to command mid- to high-teen earnings multiples, such valuations become increasingly difficult to justify.
On the technical outlook, Jain added that the structure in the IT is beginning to show signs of stabilization, as the previously falling moving averages are flattening out and hinting at a potential trend transition.
“This suggests that downside momentum is gradually fading and support zones are becoming increasingly resilient. While a decisive breakout above the upper range is still required to confirm a bullish reversal, the current setup indicates that downside risk appears capped around the identified support band unless fresh negative triggers emerge,” Jain added.
Disclaimer: This story is for educational purposes only. Please consult with an investment advisor before making any investment decisions.