IT stocks drop up to 1.5% ahead of TCS Q1 results tomorrow

Mumbai, July 9, 2025 – Information technology (IT) stocks came under selling pressure on Tuesday, with key players in the sector witnessing declines of up to 1.5% in intraday trade. The downward move comes a day before Tata Consultancy Services (TCS), India’s largest IT services exporter, is scheduled to announce its first-quarter (Q1) results for the financial year 2025-26.

The NSE Nifty IT index fell nearly 1% by the afternoon session, underperforming the benchmark Nifty 50, which remained flat amid mixed global cues and subdued investor sentiment. Stocks like Infosys, HCLTech, Wipro, and Tech Mahindra saw declines ranging from 0.5% to 1.5%, with TCS also edging lower ahead of its earnings release on Wednesday.

TCS Q1 Results in Focus

Investor attention is squarely focused on TCS’s earnings, as the IT bellwether sets the tone for the rest of the sector. Analysts expect the company to report a muted quarter, with modest revenue growth and stable margins, weighed down by delayed client decision-making and ongoing macroeconomic challenges in key markets such as the U.S. and Europe.

“We expect TCS to report revenue growth in the range of 0.8-1.2% quarter-on-quarter in constant currency terms, with EBIT margins remaining stable due to cost optimization measures,” said Ruchir Sharma, Senior IT Analyst at ICICI Securities. “However, guidance on deal wins and client budgets for FY26 will be crucial for stock direction.”

Brokerages remain cautious on near-term performance, highlighting weak discretionary IT spending and prolonged decision cycles as key overhangs.

Sector Under Macro Strain

The Indian IT sector has been battling headwinds for the past several quarters. A slowdown in IT spending by global clients, especially in the banking, financial services, and insurance (BFSI) segment, has led to muted revenue growth and constrained profitability.

“The global IT services demand environment remains soft. While large deal pipelines remain healthy, conversion is taking longer than usual,” said Meera Desai, Head of Research at Anand Rathi. “The next two quarters will be critical to assess if a rebound is underway or if the weakness is more structural.”

In June, Accenture’s latest earnings and forward guidance reinforced concerns about delayed enterprise tech investments and lower discretionary project spends — a trend that is expected to affect Indian IT companies with global exposure.

Stock Movement Highlights

• TCS: Fell 0.7% to ₹3,945 amid cautious positioning by investors.

• Infosys: Dropped 1.2% to ₹1,488 as sentiment turned bearish ahead of sector-wide results.

• Wipro: Declined 1.4% to ₹503, continuing its underperformance.

• HCLTech: Slipped 1.1% to ₹1,425 despite optimism about its ER&D business segment.

• Tech Mahindra: Lost 0.9% to ₹1,230 amid concerns about telecom vertical performance.

Mid-cap IT stocks also mirrored the trend, with names like LTIMindtree and Persistent Systems seeing declines of over 1%.

Market Context

Broader equity markets remained lackluster amid cautious global sentiment. Investors are awaiting fresh cues from U.S. Federal Reserve Chair Jerome Powell’s congressional testimony and the upcoming U.S. CPI data, which could impact interest rate expectations.

Back home, market participants are eyeing India’s inflation print due later this week and monsoon progress, both of which could influence RBI’s policy stance in August.

“The combination of global uncertainties and domestic macro triggers is keeping traders on the sidelines,” said Vijay Khemka, Senior Market Strategist at HDFC Securities. “In such an environment, even slightly disappointing earnings from heavyweight sectors like IT could trigger profit-booking.”

Investor Outlook: All Eyes on Commentary

While short-term sentiment remains muted, analysts advise investors to focus on management commentary rather than headline numbers.

“Earnings will be backward-looking, but forward-looking indicators like deal wins, client additions, and commentary on AI-driven service demand will be more relevant for long-term positioning,” said Harsh Mehta, Portfolio Manager at Axis Mutual Fund.

Some brokerages suggest a “buy on dips” strategy for quality names like Infosys and TCS, especially if valuations correct further after results.

“We maintain our positive stance on TCS and Infosys for long-term investors. Any weakness post-results may provide an opportunity to accumulate at better price points,” said Mehta.

As India’s IT bellwether prepares to announce its first-quarter results, investor sentiment is cautious but not entirely pessimistic. With high expectations from digital, AI, and cloud segments, the market is looking beyond near-term pain to assess whether the sector can navigate global headwinds and regain momentum.

The performance and outlook provided by TCS tomorrow will set the tone for the rest of the earnings season, potentially dictating the trajectory of the IT sector for the coming quarters.