{"id":14663,"date":"2026-06-03T09:45:57","date_gmt":"2026-06-03T09:45:57","guid":{"rendered":"https:\/\/lemonn.co.in\/blog\/?p=14663"},"modified":"2026-06-03T09:45:59","modified_gmt":"2026-06-03T09:45:59","slug":"nifty-it-slides-after-rally","status":"publish","type":"post","link":"https:\/\/lemonn.co.in\/blog\/market-updates\/nifty-it-slides-after-rally\/","title":{"rendered":"Nifty IT slides nearly 6% as three\u2011day rally unravels"},"content":{"rendered":"
\"Nifty<\/figure>\n\n\n

The Nifty IT index<\/strong> fell nearly 6% on Wednesday, 3 June<\/strong>, snapping a three\u2011session, about 7%<\/strong> rebound as investors booked profits in frontline technology stocks amid renewed concerns over AI\u2011driven disruption and stretched valuations after the short rally.<\/p>\n\n\n\n

Selling was broad based across large and midcap IT names, with Tata Consultancy Services (TCS)<\/strong> dropping up to 9%<\/strong>, Infosys<\/strong> sliding around 4%<\/strong>, and LTIMindtree<\/strong> and Tech Mahindra<\/strong> losing more than 6%<\/strong> intraday, according to exchange data.<\/p>\n\n\n\n

Market overview<\/h2>\n\n\n\n
Index \/ Stock<\/strong><\/th>Session move & context<\/strong><\/th>Comments<\/strong><\/th><\/tr><\/thead>
Nifty IT index<\/strong><\/td>Down about 5.8\u20136%<\/strong> to near 29,300<\/strong><\/td>Worst sectoral performer; snaps three\u2011day, 7% rebound.<\/td><\/tr>
TCS<\/strong><\/td>Intraday low \u20b92,224.8<\/strong>, down about 9%<\/strong><\/td>Biggest single\u2011day fall since March 2020.<\/td><\/tr>
Infosys<\/strong><\/td>Around \u20b91,222\u20131,230<\/strong>, down about 4%<\/strong><\/td>Wipes out over \u20b920,000 crore<\/strong> in market value.<\/td><\/tr>
LTIMindtree (LTM)<\/strong><\/td>Intraday low \u20b93,993<\/strong>, down about 8%<\/strong><\/td>Biggest single\u2011day fall since January 2024.<\/td><\/tr>
Tech Mahindra<\/strong><\/td>Around \u20b91,470\u20131,500<\/strong>, down about 5\u20136.5%<\/strong><\/td>Largest fall since February 2026.<\/td><\/tr>
Coforge<\/strong><\/td>Intraday low near \u20b91,422<\/strong>, down about 6\u20136.4%<\/strong><\/td>Snaps three\u2011day winning streak.<\/td><\/tr>
Persistent Systems<\/strong><\/td>Around \u20b95,119<\/strong>, down about 6\u20136.4%<\/strong><\/td>Biggest drop since April 2026.<\/td><\/tr>
Mphasis, OFSS, Wipro, HCL Tech<\/strong><\/td>Down about 2.5\u20134%<\/strong><\/td>All Nifty IT constituents close in red.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
    \n
  • All 10 Nifty IT<\/strong> stocks ended lower, erasing a chunk of recent gains.<\/li>\n\n\n\n
  • Sector wealth destruction estimated at over \u20b91.5 lakh crore<\/strong> in a single session.<\/li>\n\n\n\n
  • TCS<\/strong> alone accounted for more than half of the value erosion.<\/li>\n<\/ul>\n\n\n\n

    From relief rally to sharp reversal<\/h2>\n\n\n\n
    Phase<\/strong><\/th>Index \/ stock move<\/strong><\/th>Period \/ trigger<\/strong><\/th><\/tr><\/thead>
    Prior three sessions<\/td>Nifty IT up about 7\u20137.6%<\/strong><\/td>Valuation buying, global software earnings, AI optimism.<\/td><\/tr>
    Monday, 1 June<\/td>Nifty IT up 2.66% to 29,854<\/strong><\/td>Strong US SaaS results, CLSA note on SaaS demand.<\/td><\/tr>
    Tuesday, 2 June<\/td>Nifty IT up about 4\u20134.2% to 31,116.6<\/strong><\/td>Best single\u2011day gain in a year; \u201cNvidia effect\u201d, AI trade.<\/td><\/tr>
    Wednesday, 3 June<\/td>Nifty IT down nearly 6% to ~29,300<\/strong><\/td>Profit\u2011taking, broader market selloff, AI deflation worries.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
      \n
    • Persistent Systems<\/strong>, Tech Mahindra<\/strong>, Infosys<\/strong>, Coforge<\/strong>, Oracle Financial Services<\/strong>, Mphasis<\/strong> led gains in the preceding up\u2011move.<\/li>\n\n\n\n
    • The rally followed months of underperformance: Nifty IT is down about 18\u201322% in 2026<\/strong>, versus roughly 10%<\/strong> decline in Nifty 50<\/strong>, as per index data cited in broker commentary.<\/li>\n\n\n\n
    • Analysts had flagged that large caps such as TCS<\/strong> and Infosys<\/strong> were trading near 16\u201317 times<\/strong> forward earnings, below 10\u2011year averages, drawing value buyers.<\/li>\n<\/ul>\n\n\n\n

      AI disruption, valuations and FII flows<\/h2>\n\n\n\n
      Factor<\/strong><\/th>Value \/ view<\/strong><\/th>Context<\/strong><\/th><\/tr><\/thead>
      AI \u201cSaaSpocalypse\u201d fears<\/td>Anthropic\u2019s Claude tools seen compressing pricing<\/td>Raises questions on labour\u2011arbitrage model.<\/td><\/tr>
      FII tech allocation<\/td>Around 7.3%<\/strong> of Nifty\u2011500 (Mar 2026)<\/td>At an all\u2011time low, per brokerage data.<\/td><\/tr>
      2025 FII IT flows<\/td>Net selling of \u20b974,698 crore<\/strong><\/td>Foreign investors cut exposure to Indian IT.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
        \n
      • Brokerages highlighted AI deflation risk<\/strong>, with cheaper, faster software development pressuring traditional services pricing.<\/li>\n\n\n\n
      • Some analysts argued that in a low single\u2011digit growth<\/strong> environment, mid\u2011to\u2011high\u2011teens P\/E leaves little margin for error.<\/li>\n\n\n\n
      • One portfolio manager described the recent bounce as a \u201cdead cat\u201d move<\/strong>, not a durable reversal, citing weak discretionary tech spending and better AI\u2011linked opportunities in Korea, Taiwan, Japan and the US.<\/li>\n<\/ul>\n\n\n\n

        Counter\u2011view: brokerages still see structural opportunity<\/h2>\n\n\n\n
          \n
        • CLSA<\/strong> noted that recent US SaaS earnings show AI has not yet hurt SaaS demand<\/strong>, with several firms maintaining or raising guidance.<\/li>\n\n\n\n
        • The brokerage said Indian IT vendors with partnerships across SAP, Snowflake, Salesforce, ServiceNow<\/strong> derive 10\u201325%<\/strong> of revenue from SaaS\u2011linked work, which remains healthy.<\/li>\n\n\n\n
        • CLSA differentiated software layers:<\/li>\n<\/ul>\n\n\n\n

          – Systems of Record (SoR)<\/strong>: less vulnerable, need deterministic outputs; AI likely to act as an interface.<\/p>\n\n\n\n

          – Systems of Engagement \/ Work<\/strong>: more exposed to AI substitution.<\/p>\n\n\n\n

            \n
          • Domestic broker Nuvama<\/strong> reiterated that the sector is \u201csetting up for a comeback, not a collapse\u201d<\/strong>, arguing enterprises will still need system integrators<\/strong> to stitch together plug\u2011and\u2011play AI and legacy stacks.<\/li>\n\n\n\n
          • Kunal Bajaj<\/strong>, research analyst at Choice Institutional Equities, said improving global software sentiment and evidence that enterprise AI adoption is expanding technology spending opportunities rather than disrupting incumbents<\/strong> are supporting the medium\u2011term case for Indian IT.<\/li>\n<\/ul>\n\n\n\n
              \n
            • “Indian IT stocks continue to extend gains, supported by improving global software sentiment and growing evidence that enterprise AI adoption is expanding technology spending opportunities rather than disrupting incumbent service providers.” \u2014 Kunal Bajaj, Research Analyst, Choice Institutional Equities<\/strong><\/li>\n<\/ul>\n\n\n\n

              Technical outlook on Nifty IT and key stocks<\/h2>\n\n\n\n
              Instrument<\/strong><\/th>Key levels \/ pattern<\/strong><\/th>Technical takeaway (as cited)<\/strong><\/th><\/tr><\/thead>
              Nifty IT index<\/strong><\/td>Support 28,800\u201329,300<\/strong>; resistance 30,500\u201332,100<\/strong><\/td>Multiple analysts see an inverse Head & Shoulders<\/strong> breakout with potential targets 32,000\u201332,500<\/strong>.<\/td><\/tr>
              TCS<\/strong><\/td>Resistance \u20b92,450\u20132,460<\/strong>; support \u20b92,330\u20132,400<\/strong><\/td>Break above near\u2011term resistance needed to confirm stronger recovery.<\/td><\/tr>
              Infosys \/ large caps<\/strong><\/td>Trading 2\u20133% below 40\u2011day EMAs pre\u2011selloff<\/td>Sustained move above EMAs seen as trigger for meaningful short\u2011covering.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n
                \n
              • Chartists earlier highlighted a bullish hammer<\/strong> on the Nifty IT monthly chart and a breakout from an inverse Head & Shoulders<\/strong> pattern, implying upside towards 32,300\u201332,500<\/strong> from around 31,050<\/strong> before Wednesday\u2019s fall.<\/li>\n\n\n\n
              • Options data showed large short positions<\/strong> in big IT names, with some fresh longs built during the rally; the latest drop suggests profit\u2011taking rather than full short squeeze.<\/li>\n<\/ul>\n\n\n\n

                Global and stock\u2011specific cues<\/h2>\n\n\n\n
                  \n
                • Stronger\u2011than\u2011expected quarterly numbers from Salesforce, ServiceNow, Snowflake, Palantir<\/strong> had helped revive confidence in software demand.<\/li>\n\n\n\n
                • A recent Nvidia\u2011led AI rally<\/strong> and comments from its CEO that Indian IT firms are well placed for AI implementation had also buoyed sentiment.<\/li>\n\n\n\n
                • Wipro\u2019s<\/strong> expanded Agentic AI<\/strong> partnership with ServiceNow<\/strong> and Coforge\u2019s<\/strong> acquisition of Encora<\/strong> were cited as examples of Indian firms pivoting into AI\u2011heavy work.<\/li>\n\n\n\n
                • At the same time, some brokerages cautioned that AI\u2011related revenue uplift<\/strong> is yet to fully offset pricing pressure and that investors will look for hard evidence in deal wins and growth<\/strong>, not just commentary.<\/li>\n<\/ul>\n\n\n\n

                  FAQs<\/h2>\n\n\n\n

                  Q: Why did Nifty IT fall nearly 6% after a strong three\u2011day rally?<\/strong><\/p>\n\n\n\n

                    \n
                  • Profit\u2011booking after a roughly 7%<\/strong> rebound, a broader market selloff, persistent concerns over AI\u2011driven margin pressure and cautious foreign flows all contributed to Wednesday\u2019s decline.<\/li>\n<\/ul>\n\n\n\n

                    Q: Are brokerages turning bearish on Indian IT after this crash?<\/strong><\/p>\n\n\n\n

                      \n
                    • Views are split: some call the bounce a temporary relief rally in a low\u2011growth, AI\u2011deflation environment, while others, including CLSA<\/strong> and Nuvama<\/strong>, argue that resilient earnings, SaaS partnerships and system\u2011integration demand support a medium\u2011term recovery.<\/li>\n<\/ul>\n\n\n\n

                      Q: What levels should traders watch on the Nifty IT index now?<\/strong><\/p>\n\n\n\n

                        \n
                      • Technical analysts cited support in the 28,800\u201329,300<\/strong> zone and resistance around 30,500<\/strong>, with a broader upside band near 32,000\u201332,500<\/strong> if the earlier inverse Head & Shoulders breakout reasserts.<\/li>\n<\/ul>\n\n\n\n

                        Frequently Asked Questions<\/h2>\n\n\n\n

                        Why did Nifty IT fall nearly 6% after a strong three\u2011day rally?<\/h3>\n\n\n\n

                        Profit\u2011taking after a roughly 7% rebound, a broader market selloff, AI\u2011related pricing concerns and cautious foreign flows drove the sharp decline.<\/p>\n\n\n\n

                        Are brokerages turning bearish on Indian IT after this crash?<\/h3>\n\n\n\n

                        Opinions are divided: some see a temporary relief rally in a low\u2011growth, AI\u2011deflation setup, while others like CLSA and Nuvama still expect a medium\u2011term recovery supported by SaaS demand and system\u2011integration work.<\/p>\n\n\n\n

                        What are the key technical levels for the Nifty IT index now?<\/h3>\n\n\n\n

                        Analysts highlight support around 28,800\u201329,300 and resistance near 30,500, with a broader upside zone around 32,000\u201332,500 if the earlier bullish pattern holds.<\/p>\n","protected":false},"excerpt":{"rendered":"

                        The Nifty IT index fell nearly 6% on Wednesday, 3 June, snapping a three\u2011session, about 7% rebound as investors booked profits in frontline technology stocks amid renewed concerns over AI\u2011driven disruption and stretched valuations after the short rally. Selling was broad based across large and midcap IT names, with Tata Consultancy Services (TCS) dropping up […]<\/p>\n","protected":false},"author":15,"featured_media":14662,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_uag_custom_page_level_css":"","_ayudawp_aiss_exclude":false,"_ayudawp_aiss_summary":"The Nifty IT index fell nearly 6% on Wednesday, 3 June, snapping a three\u2011session, about 7% rebound as investors booked profits in frontline technology stocks amid renewed concerns over AI\u2011driven disruption and stretched valuations after the short rally. The rally followed months of underperformance: Nifty IT is down about 18\u201322% in 2026, versus roughly 10% decline in Nifty 50, as per index data cited in broker commentary. Views are split: some call the bounce a temporary relief rally in a low\u2011growth, AI\u2011deflation environment, while others, including CLSA and Nuvama, argue that resilient earnings, SaaS partnerships and system\u2011integration demand support a medium\u2011term recovery.","_ayudawp_aiss_summary_provider":"extractive","_ayudawp_aiss_summary_hash":"b45d6d550d4f8032aca353b4af3bab002116ef0e","footnotes":""},"categories":[512],"tags":[],"class_list":["post-14663","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-market-updates"],"blocksy_meta":[],"uagb_featured_image_src":{"full":["https:\/\/lemonn.co.in\/blog\/wp-content\/uploads\/2026\/06\/nifty-it-slides-nearly-6-as-three-day-rally-unravels-banner.png",1200,640,false],"thumbnail":["https:\/\/lemonn.co.in\/blog\/wp-content\/uploads\/2026\/06\/nifty-it-slides-nearly-6-as-three-day-rally-unravels-banner-150x150.png",150,150,true],"medium":["https:\/\/lemonn.co.in\/blog\/wp-content\/uploads\/2026\/06\/nifty-it-slides-nearly-6-as-three-day-rally-unravels-banner-300x160.png",300,160,true],"medium_large":["https:\/\/lemonn.co.in\/blog\/wp-content\/uploads\/2026\/06\/nifty-it-slides-nearly-6-as-three-day-rally-unravels-banner-768x410.png",768,410,true],"large":["https:\/\/lemonn.co.in\/blog\/wp-content\/uploads\/2026\/06\/nifty-it-slides-nearly-6-as-three-day-rally-unravels-banner-1024x546.png",1024,546,true],"1536x1536":["https:\/\/lemonn.co.in\/blog\/wp-content\/uploads\/2026\/06\/nifty-it-slides-nearly-6-as-three-day-rally-unravels-banner.png",1200,640,false],"2048x2048":["https:\/\/lemonn.co.in\/blog\/wp-content\/uploads\/2026\/06\/nifty-it-slides-nearly-6-as-three-day-rally-unravels-banner.png",1200,640,false],"web-stories-poster-portrait":["https:\/\/lemonn.co.in\/blog\/wp-content\/uploads\/2026\/06\/nifty-it-slides-nearly-6-as-three-day-rally-unravels-banner-640x640.png",640,640,true],"web-stories-publisher-logo":["https:\/\/lemonn.co.in\/blog\/wp-content\/uploads\/2026\/06\/nifty-it-slides-nearly-6-as-three-day-rally-unravels-banner-96x96.png",96,96,true],"web-stories-thumbnail":["https:\/\/lemonn.co.in\/blog\/wp-content\/uploads\/2026\/06\/nifty-it-slides-nearly-6-as-three-day-rally-unravels-banner-150x80.png",150,80,true]},"uagb_author_info":{"display_name":"Team Lemonn","author_link":"https:\/\/lemonn.co.in\/blog\/author\/yudh\/"},"uagb_comment_info":0,"uagb_excerpt":"The Nifty IT index fell nearly 6% on Wednesday, 3 June, snapping a three\u2011session, about 7% rebound as investors booked profits in frontline technology stocks amid renewed concerns over AI\u2011driven disruption and stretched valuations after the short rally. Selling was broad based across large and midcap IT names, with Tata Consultancy Services (TCS) dropping up…","_links":{"self":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/posts\/14663","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/comments?post=14663"}],"version-history":[{"count":1,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/posts\/14663\/revisions"}],"predecessor-version":[{"id":14665,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/posts\/14663\/revisions\/14665"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/media\/14662"}],"wp:attachment":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/media?parent=14663"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/categories?post=14663"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/tags?post=14663"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}