Shares of Tata Consultancy Services (TCS) tumbled by 9% to hit an intraday low of Rs 2,224.80 on the NSE, marking the worst single-day decline since March 12, 2020, when markets reacted to the COVID-19 pandemic announcement by the WHO. The sharp decline follows a recent rally in IT stocks, with the Nifty IT index having surged over 4% on Tuesday, its largest single-day gain since May 2026.
The Nifty IT index had rallied nearly 8% over the previous three sessions, contrasting with a 2% fall in the Nifty 50 during the same period. TCS shares had climbed 8% over two sessions to close at Rs 2,446.90 on Tuesday. However, Wednesday's sell-off erased these gains, highlighting the volatility in IT stocks.
Technical analysis indicates that TCS faced strong resistance near its 100-day EMA zone of Rs 2,600–2,605, leading to a sharp reversal. Sudeep Shah, Head of Technical Research and Derivatives Research at SBI Securities, noted that momentum indicators have weakened, with the RSI turning lower after approaching the 60 mark. This signals a loss of bullish momentum, and the stock has slipped below the Bollinger Band midline, a key support level.
“Momentum indicators have also weakened, with the RSI turning lower after approaching the 60 mark, signalling a loss of bullish momentum.”
Sudeep Shah, Head of Technical Research and Derivatives Research at SBI Securities
Harshal Dasani, Business Head at INVasset PMS, pointed out that the 9% fall after a 6.53% rebound suggests the previous move was a dead cat bounce rather than fresh accumulation. He emphasized that the market is repricing the low-growth IT model, with the 52-week low near Rs 2,206 being a critical level to watch.
The Rs 2,210-2,200 zone remains crucial support, and a breakdown below this level could accelerate further downside. On the upside, Rs 2,400 to Rs 2,450 is the first heavy supply zone, where recent rallies have failed. Until TCS reclaims this band with strong participation, rallies are likely to meet selling pressure.
“The 9% fall after a 6.53% rebound in the previous session confirms that the earlier move was a dead cat bounce, not fresh accumulation.”
Harshal Dasani, Business Head at INVasset PMS
Background
The decline in TCS shares is significant as it reflects broader market concerns about the IT sector's growth prospects amid rising AI risks and high valuations. Historically, TCS has been a high-quality franchise, but current market dynamics suggest that quality alone may not suffice when growth is weak.
Investors should closely monitor TCS's movements around the 52-week low of Rs 2,206. A decisive close below this level could weaken the stock's structure further. As the market continues to adjust to new realities, the focus will be on whether TCS can regain lost ground and stabilize its trajectory.
