Nifty IT slides 5% as TCS, Infosys fall up to 7% on June 3

A sharp reversal after a brief rally

The Nifty IT index saw a steep drop in a volatile session, snapping a short three-day rally as investors booked profits and global software stocks weakened. Reports during the day flagged declines ranging from about 3.5% to 5.5% in the sectoral index, with Nifty IT also cited as falling 4.4% and 4.5% in different updates. Heavyweights such as TCS and Infosys led the declines, while mid-cap IT shares were also under pressure. The move stood out because it came against a backdrop of shifting intraday sentiment in the broader market.

Even as technology shares weakened, the broader market showed signs of recovery from intraday lows in some updates, with the Nifty back above 23,500 at one point. That contrast underlined how concentrated the selling was within IT, which emerged as the worst-performing sectoral pocket in early trade in multiple reports.

What the tape showed: Nifty IT under broad selling pressure

The decline was not confined to one or two names. In one update, all 10 constituents of the Nifty IT index were trading in the red as the index dropped 3.7% to its lowest level since May 2023. Another update described sustained selling through Friday’s session, with the Nifty IT index closing down 5.29% and significantly underperforming the broader market.

Across these updates, the common thread was broad-based selling across large-cap and mid-cap IT names. The slide was also framed as a continuation move in some reports, with the sector said to have declined nearly 4.5% over the past two trading sessions.

Stock moves: TCS, Infosys, HCL Tech and TechM in focus

Heavyweights led from the front on the downside. One update highlighted TCS down about 6% on June 3, while another noted that Infosys could be down nearly 7% in the sharpest phase of the selloff. HCL Tech was cited as falling over 5.8%, TCS as declining nearly 5% in another session recap, and Tech Mahindra as slipping over 4.4%.

Pressure extended beyond the index leaders. Persistent Systems was flagged as a major laggard in one update, falling nearly 5%. Mid-cap IT shares were described as falling in the 2%-5% range in parts of the selloff. Wipro was also referenced as trading lower by around 1.7% in one recap.

Intraday whipsaws: strength in one window, weakness in another

The flow of updates also captured how quickly sentiment was changing. While several segments described a sharp IT correction, other lines indicated a phase where IT was “up 4%” and “continu[ing] to outperform for the third consecutive day.” That juxtaposition points to a market that moved between momentum buying and rapid profit-taking.

Such swings are common when positioning is crowded and the market is reacting simultaneously to global cues, domestic risk-off trades, and stock-specific reactions to guidance and earnings expectations. What remained consistent across the reports was that IT was experiencing outsized moves compared to many other sectoral indices.

Key triggers cited: global tech weakness and US macro uncertainty

Multiple updates attributed the correction to a combination of global and domestic factors. Global software stocks were described as declining, which weighed on sentiment for Indian IT exporters. US macro uncertainty featured prominently, especially in references to stronger US jobs data, rising inflation data, and uncertainty around the trajectory of US interest rates.

The concern for the sector is straightforward: the United States is the single largest market for Indian IT exporters. When investors turn cautious on US growth, rates, or enterprise technology spending, Indian IT valuations tend to adjust quickly.

AI disruption fears: efficiency gains versus revenue visibility

A repeated theme was worry about artificial intelligence-led disruption and what it means for traditional IT services models. Analysts were cited as becoming more cautious about the long-term impact of AI-led efficiency gains on India’s export-driven IT services industry.

The debate is not about whether AI will be adopted, but how quickly it changes billing models, staffing intensity, and deal structures. These concerns were presented as a sentiment overhang, layered on top of weak global cues and rate uncertainty.

Earnings and guidance: weak outlook adds to the pressure

Some updates explicitly linked the selloff to weak earnings and cautious management commentary. One line noted the tech index “collapsed about 10% in a single week” amid weak Q4 earnings and cautious guidance, erasing five weeks of gains. Another update pointed to a weak growth outlook from Infosys as a factor during a session where IT remained under sustained selling pressure.

A separate mention flagged a weak earnings outlook from HSBC as another sentiment hit. Taken together, these inputs reinforced the view that investors were reacting to a less supportive near-term fundamental setup.

Flows, market-cap erosion, and longer-term performance

The sector’s drawdown was presented as meaningful not only in percentage terms but also in wealth erosion. One update said the tech index shed about Rs 2.5 lakh crore in market capitalisation in a week. Another referenced a larger market-cap erosion figure of nearly Rs 4.8 lakh crore, alongside muted three-year returns.

Positioning and flows also came up. One update cited significant FII outflows of about Rs 11,000 crore as an added pressure point, alongside AI-driven disruption concerns.

On the performance side, the Nifty IT index was described as having corrected roughly 25% since the start of the calendar year, falling over 8% in a week and about 22% over the past year. In the same one-year window, the broader Nifty 50 was cited as up close to 13%, highlighting the extent of underperformance.

Levels to watch: support near 31,430 and resistance near 33,200

One technical view in the updates highlighted 31,430 as a key support area for the Nifty IT index. The note added that if this level breaks on a closing basis, the index could decline further toward the 30,000 zone. On the upside, resistance was cited near 33,200.

The same set of figures also framed the drawdown in points: the index was said to have traded near 36,100 earlier in the month before slipping toward the 31,400-32,000 range, translating into a drop of roughly 2,900-3,000 points from recent highs.

Key facts at a glance

Why this matters for investors tracking Indian IT

The cluster of updates points to a sector dealing with multiple cross-currents at once: a shifting global tech tape, questions on US rates and spending, and a structural debate on how AI changes delivery and pricing in IT services. The immediate market impact was visible in sharp, broad-based declines, including 52-week lows referenced for some large-cap names.

The next set of signals for investors will likely come from how the index behaves around the cited support zone near 31,430 and from any incremental clarity on demand, deal momentum, and management commentary on AI-led changes in client spending.