Shares of Tata Consultancy Services (TCS) are undergoing their sharpest decline since the 2008 global financial crisis. The company has lost nearly ₹5.66 lakh crore in market capitalization, falling 34% from its all-time high of ₹4,585.90. So far in 2025, the stock has slipped 26%, reducing its market value to ₹10.93 lakh crore from a peak of ₹16.59 lakh crore.
The downturn has been triggered by a combination of weak demand, the disruptive impact of generative AI, and a mixed first-quarter performance. Foreign portfolio investors, who once had significant exposure to Indian IT, have reduced their TCS holdings from 12.35% in June 2024 to 11.48% in June 2025. The broader IT sector has also felt the pressure, with the Nifty IT index plunging 25% this year, making it the weakest-performing sectoral index in 2025. Out of the ₹95,600 crore withdrawn by foreign investors from Indian equities up to July 2025, more than half was from IT stocks.
Despite the heavy selling, domestic institutional investors have increased their exposure to TCS. Mutual funds, in particular, raised their stake from 4.25% to 5.13% over the past year, with fresh inflows recorded in July. Valuations of the stock have corrected sharply, with the trailing price-to-earnings multiple dropping from 41x to nearly 20x.
Long-term data shows that the Indian IT sector has compounded at 12.5% annually over the past two decades, though returns in the last three to five years have lagged the broader market.
The company has also initiated a workforce reduction of about 2%, a move that highlights ongoing challenges in the demand environment and raises concerns over execution capacity and attrition in the near term.
