Indian information technology stocks came under significant selling pressure on June 3, with the Nifty IT index falling more than 4%, making it one of the worst-performing sectoral indices of the day. The decline snapped a strong three-day rally in the sector that had been driven by optimism around global artificial intelligence spending and stronger-than-expected earnings from major U.S. software companies.

Market leaders Tata Consultancy Services (TCS), Infosys, Tech Mahindra and HCL Technologies declined sharply during the session, while mid-cap IT companies such as Coforge, Persistent Systems, LTIMindtree and Mphasis also witnessed broad-based selling. The correction followed a strong run-up in IT stocks over the previous three trading sessions, during which the Nifty IT index had gained more than 8%.

The selloff mirrored weakness in global software and technology shares after enthusiasm surrounding AI-related spending and enterprise software demand began to moderate. Investors chose to lock in gains after the recent rally, resulting in profit booking across large-cap and mid-cap technology counters.

The weakness in IT stocks also weighed on the broader market, contributing to declines in both the Nifty 50 and Sensex. Analysts noted that despite the sharp correction, the sector had witnessed a strong rebound over the previous sessions on expectations that increasing enterprise AI investments would support future deal wins and revenue growth for Indian IT services companies.

While near-term volatility remains elevated, market participants continue to monitor global technology spending trends, AI adoption rates, and demand conditions in key overseas markets, particularly the United States, which remains the largest revenue contributor for Indian IT companies.