TCS Crashes 9% to Rs. 2,229 as AI Fears Trigger IT Stock Selloff

Tata Consultancy Services (TCS) shares fell nearly 9% on Wednesday, closing at Rs. 2,229, their steepest single-day decline in months, as a selloff swept through India’s information technology sector. The stock dropped Rs. 219, or 8.95%, after hitting an intraday low near Rs. 2,225, according to market data. The Nifty IT index also declined almost 6%, becoming the worst-performing sectoral index on the National Stock Exchange (NSE), with major peers like Infosys, HCL Technologies, and Tech Mahindra experiencing heavy selling pressure. The decline reversed recent gains made over the past three trading sessions, when investors had returned to IT stocks seeking value amid stretched valuations. However, the rally lacked strong fundamental support, and as broader market sentiment weakened, investors chose to lock in profits, triggering further selling. Analysts noted that frontline IT stocks had corrected sharply over the past year, bringing valuations closer to long-term averages. This attracted bargain hunters but also highlighted persistent concerns over AI’s impact on traditional outsourcing models. The sector faces anxiety over automation reducing demand for software development and support services, as AI-enabled programming systems improve efficiency and lower costs. A disconnect has emerged between Indian IT stocks and global tech stocks, which have surged due to AI, chip production, and cloud computing demand. While US, Taiwan, Japan, and South Korea tech stocks have thrived, Indian IT firms remain vulnerable to pricing pressures and productivity gains in legacy projects, despite potential new revenue streams from AI adoption.