TCS Shares Plunge 44% From Peak to 5-Year Low Amid IT Sector Selloff

Market Action: Shares of Tata Consultancy Services (TCS) plunged sharply, down ~44% from their all-time high of ₹4,592, hitting a five-and-a-half-year low of ₹2,585 per share, amid broad stock market volatility in the equities markets and heightened market participants’ concerns about AI disruption. The selloff erased a significant chunk of market capitalisation, now below ₹9.60 lakh crore, signaling a deep valuation correction in one of India’s largest publicly traded blue-chip companies.

Sector & Market Context

• The IT sector witnessed heavy declines, with peers like Infosys and Wipro also under pressure in the National Stock Exchange and Bombay Stock Exchange trades, reflecting a broader bear market sentiment in technology stocks.

• The decline in TCS contributed to a downturn in the Nifty IT index and weighed on equity market indexes, compounding market volatility across mid-cap and large-cap stocks.

• Analysts note that TCS’s sell-off has shifted the market hierarchy, allowing State Bank of India (SBI) to surpass TCS in market capitalisation, highlighting the ongoing market capitalisation reshuffling among listed companies.

Why This Matters for Traders & Investors

• The plunge represents a potential deep-value opportunity in a volatile stock market, with TCS now trading at multi-year lows relative to earnings, dividends, and free float.

• Traders and institutional investors are closely monitoring technical indicators, moving averages, and intraday trades for signs of rebound or further declines.

• JPMorgan has highlighted TCS as a stock to watch, citing high dividends, strong financials, and a potentially profitable buy and sell opportunity, but warns of persistent downside risk if the AI disruption narrative persists.

Market Impact & Valuation Trends

• The plunge wiped out ₹5.7 lakh crore in IT sector value over just eight trading sessions, affecting investor portfolios and the overall equity market.

• TCS’s sell off also impacted stock indexes like the BSE Sensex, Nifty, and NASDAQ-traded IT stocks, reflecting the interconnected nature of global markets, including Dow Jones Industrial Average and Nasdaq Composite movements.

• Traders tracking ETF flows, bond funds, and derivatives in futures and options markets are adjusting positions, as market data indicates heightened liquidity concerns and volatility in currencies, commodities, and treasury yields.

Analyst Outlook

Bullish Case:
✔ TCS remains a blue-chip stock with strong corporate earnings, free cash flow, and dividend yield, attractive to long-term investors and mutual fund holdings.

Bearish Case:
✘ Structural challenges from AI automation and declining IT outsourcing demand may prolong the downturn, with market participants cautious amid global market uncertainties and rate hikes by the Federal Reserve.

Key Takeaways

• Traders should watch market volatility, technical indicators, and stock indexes like Sensex, Nifty, Dow, and Nasdaq for buy and sell signals.

• Investors seeking long-term growth may consider TCS for its dividends, corporate earnings, and capitalization strength but must weigh bearish sentiment and sector downturn risk.

• TCS’s multi-year low and plunge emphasize the importance of market data, valuation metrics, and sector trends in equity market strategies.

Bottom Line:

TCS’s sharp decline, triggered by AI disruption fears and a broader IT sector sell-off, has created a pivotal moment in the equities markets. Investors must navigate volatility, bearish sentiment, and deep-value opportunities while monitoring market indexes, futures, ETFs, and intraday trades for tactical decisions.

FAQs 

Q1: Why did TCS shares plunge 44% from their peak?
A: TCS fell due to a broad IT sector selloff, concerns over AI disruption, and a valuation wipeout, hitting a 5-year low and affecting market capitalization.

Q2: How much market value did TCS lose in the recent selloff?
A: The stock drop erased around ₹5.7 lakh crore in IT sector value, impacting Nifty, Sensex, and equities markets, signaling heightened market volatility.

Q3: Which companies surpassed TCS in market capitalization?
A: State Bank of India (SBI) overtook TCS in market cap, reflecting a shift in market hierarchy among listed companies and blue-chip stocks.

Q4: Is this a buying opportunity for investors?
A: Traders may see deep-value potential with strong dividends, corporate earnings, and free cash flow, but bearish sentiment and AI fears suggest caution.

Q5: How did the TCS crash affect other stocks and indexes?
A: The selloff dragged Infosys, Wipro, Nifty IT, and Nasdaq-traded IT stocks lower, impacting equity markets, stock indexes, and investor portfolios globally.

Q6: What should traders watch in the coming sessions?
A: Monitor technical indicators, moving averages, intraday trades, futures, ETFs, and market capitalization trends for potential rebound or further decline.