TCS, TechM Plunge as IT Sector Braces for Muted Q3 Earnings

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AuthorAarav Shah|Published at:
TCS, TechM Plunge as IT Sector Braces for Muted Q3 Earnings
Overview

Major Indian IT stocks, including TCS and Tech Mahindra, fell up to 3% ahead of the third-quarter earnings season. Brokerages forecast tepid results due to weak U.S. demand and seasonal client shutdowns, with the Nifty IT index already down 12.6% in 2025. TCS and HCLTech are set to report results on January 12.

Shares of major Indian IT firms tumbled as much as 3 percent on Thursday, signaling caution ahead of the critical December quarter earnings season. Tata Consultancy Services (TCS) led the decline, while Tech Mahindra, Infosys, and Wipro also saw significant dips.

Profit Booking Before Earnings

The sell-off saw profit booking materialize as investors braced for another muted quarter. Tata Consultancy Services (TCS) slipped by 3 percent, Oracle Financial Services Software dropped 2 percent, and Tech Mahindra and Wipro fell over 2 percent. Nine of the ten Nifty IT index constituents traded lower.

Analyst Expectations for a Muted Quarter

Brokerages anticipate subdued performance for Indian IT companies. Weak demand in the United States, coupled with holiday-period client shutdowns, is expected to weigh on technology spending. Analysts project average year-on-year revenue growth of about 4 percent for the top six IT firms, a slowdown from the 6.5 percent recorded in the September quarter. Profit growth is estimated at a marginal 5 percent.

Macro Headwinds Persist

The $283-billion Indian IT industry continues to grapple with macroeconomic uncertainties. Concerns over potential U.S. tariffs, proposed visa fee increases, and subdued client spending amid global economic slowdown fears are dampening growth prospects. The U.S. market remains a crucial revenue driver for these exporters.

AI's Long-Term Promise

While a cautious near-term environment persists, indicated by sector bellwether Accenture's recent outlook, a long-term positive view centers on Artificial Intelligence. Brokerages expect AI-related momentum to build over the next six months, with demand improving notably by 2026.

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