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Indian shares fell on Tuesday, snapping a four-session winning streak, dragged by information technology stocks on concerns over near-term earnings, while a jump in Tata Motors on demerger plans capped losses.

The blue-chip index NSE Nifty 50 shed 0.22% to 22,356.30, while the BSE Sensex dropped 0.26% to 73,677.13 at the close.

Heavyweight IT stocks dropped 1.59% on the day after CLSA flagged "more downside risks for fiscal 2025 earnings in the sector due to weak demand outlook".

The brokerage downgraded Tata Consultancy Services and HCLTech to 'sell' from 'underperform'. TCS and HCLTech fell 1.71% and 1.14%, respectively.

The U.S. Federal Reserve Chair Jerome Powell's congressional testimony and key labour market data, both due later in the week, will also be crucial for IT companies, which earn a significant share of their revenue from the United States.

However, both the Nifty 50 and Sensex logged new closing highs in the previous three sessions, on the back of faster-than-expected domestic quarterly growth, with the Nifty 50 settling above the 22,300-level in each of the four sessions in March.

Analysts attributed the consolidation and occasional profit booking to elevated valuations, but they remained positive on the outlook for Indian equities.

"It is crucial to acknowledge the strong macroeconomic, corporate fundamentals and stability that underpin India's equity valuation, paving the way for further upside potential," said Mike Shiao, chief investment officer of Asia ex-Japan at Invesco.

Auto stocks gained 1.35%, boosted by a 3.51% jump in Tata Motors, which announced plans to split into two separate listed companies.

The broader, more domestically focussed small-caps and mid-caps fell 1.24% and 0.27%, as concerns persisted over excessive fund inflows into the segments.

Small-cap index constituent IIFL Finance tumbled 20%, a day after India's central bank ordered the non-bank lender to stop sanctioning, disbursing and selling gold loans with immediate effect.