Indian IT stocks fell on Thursday as traders locked in gains following a sharp run-up in the sector over the previous two sessions.
Tata Consultancy Services Ltd. declined as much as 1.1% to Rs 2,216 after hitting a six-year low in the previous session. The stock continued to trade near that level.
The selling was widespread. Infosys Ltd., Oracle Financial Services Software Ltd. and Persistent Systems Ltd. each fell as much as 2.3%. Coforge Ltd. dropped 2.1% to Rs 1,391, while Mphasis Ltd. fell 1.9% to Rs 2,245. HCLTech Ltd. slipped 1.8% to Rs 1,158 and LTIMindtree Ltd. lost 1.3% to Rs 4,000. Tech Mahindra Ltd. outperformed peers, rising as much as 1.3% to Rs 1,491.
The decline followed a strong advance in technology shares earlier this week. The Nifty IT index had gained nearly 8% in the previous two trading sessions, outpacing the broader market.
Recent buying was driven by expectations that increased spending on artificial intelligence would support software demand and digital transformation projects globally. After the rapid rise, short-term traders chose to book profits, triggering a pullback across the sector.
Market participants largely viewed the move as a consolidation after recent gains rather than a sign of deteriorating business conditions.
Valuation Debate
The trend was not limited to India. Technology stocks globally have also seen some selling after a strong run linked to expectations of higher spending on emerging technologies.
Investors are now assessing how quickly those investments will translate into revenue growth. While long-term demand expectations remain intact, questions persist over the pace at which technology companies will convert that opportunity into earnings.
Those concerns are particularly relevant for Indian IT services firms. Unlike the United States, where chipmakers and platform providers have emerged as direct beneficiaries of the technology cycle, India does not have a listed company widely regarded as a pure-play beneficiary.
As a result, valuations in the sector have remained relatively contained despite the recent optimism, leaving investors more cautious after sharp gains.
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