IT stocks crack: Nifty IT slides over 5% after three-day surge

The Nifty IT index slumped 5.13% to 29,520.95 on Wednesday as investors booked profits after a sharp rally in technology stocks over the previous three sessions.

The sector had emerged as one of the market's best performers earlier this week, with the Nifty IT index surging 7.64% in three consecutive sessions. The rally was driven by optimism around artificial intelligence spending, strong earnings and guidance from U.S. software companies. However, the sharp run-up triggered profit booking across the sector.

Selling pressure was broad-based, with all major constituents declining. TCS plunged 8.04%, while LTIMindtree fell 7.29%. Coforge dropped 5.63%, Persistent Systems declined 5.47%, and Tech Mahindra lost 5.21%.

HCL Technologies shed 4.23%, Infosys slipped 3.74%, Mphasis fell 3.43%, Wipro declined 2.64% and Oracle Financial Services Software lost 1.99%.

The decline in IT stocks also weighed on the broader market. IT stocks were among the biggest drags on benchmark indices during the session.

Despite the correction, market participants continue to remain positive on the sector's long-term prospects, citing growing enterprise spending on artificial intelligence, cloud infrastructure and digital transformation initiatives. Recent optimism was reinforced by strong commentary from global technology companies on AI-related demand.

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