What’s Driving the 17% Drop in TCS Shares This February?
We’ve seen TCS (Tata Consultancy Services), one of India’s largest IT giants,s lose roughly 17% of its share value in February 2026. This sharp fall has grabbed investor attention and raised questions about the future of Indian IT stocks. Before diving into causes, let’s set the scene: the sell‑off isn’t isolated just to TCS. Other big IT names like Infosys, Wipro, and HCL Tech have also slid, dragging the Nifty IT index lower and shaking confidence across markets.
Quick Market Snapshot: TCS Share Movements
- Share Price: As of 23 Feb 2026, TCS shares were trading around ₹2,676 per share, well below the 52-week high of ₹3,763.
- February Drop: Shares fell nearly 17% so far in February.
- Sector Pressure: Nifty IT index trading near multi-month lows.
- Peer Performance: Infosys and HCL Tech fell up to 4% in single sessions.
- Market Context: The decline isn’t just TCS-specific; it reflects broader tech sector sentiment.
Key Reasons Behind the Share Drop
- Slower Growth, Margins Under Pressure: Q3 FY26 PAT fell 14% YoY to ₹10,657 crore. Shrinking margins and cost pressures dent investor confidence.
AI Disruption Fears:
- Traditional billing by human hours may decline due to AI automation.
- Tools like Anthropic’s Claude Code AI challenge legacy IT models.
- The market worries about slower growth or the need for rapid adaptation.
Global Macroeconomic Headwinds:
- Higher U.S. interest rates made tech spending cautious.
- Trade policy uncertainty and slowing global trade cloud revenue outlooks.
Analyst Downgrades:
- Jefferies downgraded TCS and peers to “underperform.”
- Institutional portfolios often react with automated selling.
Analyst Insights: What Experts Are Saying
- Technical Factors: Stock struggling below key support, triggering momentum-driven selling.
- Long-Term View: TCSi is still building AI capabilities; long-term growth story intact.
- Market Repricing: Short-term pain reflects sentiment; long-term promise remains.
Broader Implications for Investors
- Volatility Reflects Sentiment: Short-term moves may not reflect fundamentals; AI pivot uncertainty affects pricing.
- Sector-Wide Weakness: TCS is a bellwether; its fall signals stress across IT funds, indices, and portfolios.
- Foreign Investment Trends: FIIs trimming IT stock positions adds selling pressure.
Conclusion
The 17% drop in TCS Shares this February reflects a combination of factors, including slower earnings growth, rising margin pressures, AI-driven disruption fears, and broader global economic uncertainty. While the decline has unsettled investors in the short term, TCS remains fundamentally strong with a diversified client base, ongoing investments in AI, and a solid balance sheet. This period of volatility is more a sign of market sentiment adjusting to new realities than a collapse in the company’s value. For long-term investors, keeping an eye on earnings recovery, client spending, and TCS’s strategic pivot toward AI services will be key to understanding the stock’s future trajectory.
FAQS
The fall was due to slower earnings growth, margin pressures, AI disruption fears, and global economic uncertainty.
Not necessarily. TCS remains fundamentally strong, but short-term volatility is high.
Yes. Infosys, Wipro, HCL Tech, and other IT stocks also saw declines during this period.
It depends on risk tolerance. Long-term investors may see opportunity, but cautious monitoring is advised.
Disclaimer:
The content shared by Meyka AI PTY LTD is solely for research and informational purposes. Meyka is not a financial advisory service, and the information provided should not be considered investment or trading advice.