IT Sector Stages Impressive Comeback After Month-Long Slump
Domestic technology stocks roared back to life last week. They broke free from a sideways trading pattern that had persisted for more than a month. The rally was fueled by several positive factors. Large-cap firms reported better growth for the December quarter. Deal pipelines appeared healthier. Company management indicated that demand conditions had finally stabilized.
This renewed optimism in the IT sector provided crucial support to the broader market. It helped the Nifty 50 index stay in positive territory with modest gains throughout the week.
Nifty IT Index Records Biggest Single-Day Jump Since May 2025
The Nifty IT index closed Friday's trading session with a powerful 3.34% surge. This marked its largest single-day spike since May of last year. A significant portion of this gain came from Infosys. Its stock price skyrocketed 5.7% to finish at ₹1,689 per share.
The late-week rally contributed to an overall weekly gain of 2.8%. This was the index's largest weekly jump in over a month. The week was shortened due to a market holiday, making the performance even more notable.
Eight out of the ten stocks in the index closed the week higher. Tech Mahindra led the charge with a 5.6% surge. Oracle Financial Services and Infosys followed closely, each posting gains exceeding 5% for the week.
Other major IT players also participated in the rally. LTIMindtree, Coforge, HCL Technologies, Wipro, and Mphasis saw their stock prices rise between 1.7% and 4.5%.
Analyst Views on the Market Movement
Mr. Ajit Mishra, Senior Vice President of Research at Religare Broking, offered his perspective. He noted that optimism from better-than-expected third-quarter earnings by select large-cap IT companies was present. However, he pointed out that this positive sentiment faced headwinds. Tariff-related uncertainties, ongoing geopolitical tensions, and continued foreign fund outflows acted as counterbalancing forces.
AI-Led Deal Wins Defy Seasonal Weakness
The December quarter is traditionally a weak period for the IT sector. Client furloughs often reduce business activity. Despite this seasonal challenge, top Indian IT companies delivered a strong performance. They posted better-than-expected revenue growth. More importantly, they secured new deals. Clients in India's massive $283 billion IT sector demonstrated a clear willingness to invest in artificial intelligence-driven projects.
Quarterly Performance Highlights of Major Firms
Infosys reported December-quarter revenue of $5.1 billion. This represented a sequential increase of 0.45%. Demand improved from clients in financial services, energy, and healthcare sectors. This improvement was aided by AI-led modernization work. However, the company's net profit fell 11% quarter-on-quarter to $747 million. Higher wage costs were cited as the primary reason for this decline.
Tata Consultancy Services posted revenue of $7.51 billion. This marked a sequential growth of 0.6%. Net profit rose 2.7% to reach $1.5 billion. The company maintained its margin at 25.2%, a notable achievement given it absorbed higher labour costs.
HCLTech delivered the strongest growth among its peers. Revenue climbed 4.1% sequentially to $3.79 billion. Profit jumped an impressive 10.5% to $537 million.
Tech Mahindra reported bigger-than-expected third-quarter revenue. Growth in its communications and manufacturing segments provided a significant boost. Revenue at India's fifth-largest IT firm rose 8.3% to 143.93 billion rupees ($1.58 billion) for the quarter ended December 31.
Wipro presented a mixed picture. Consolidated sales increased 5.54% to $2.59 billion. However, net profit fell 7% to ₹31.19 billion. The Bengaluru-based company reported that its deal bookings dropped to a six-quarter low during the December period. Total deal bookings for the third quarter stood at $3.34 billion. This compared with $4.69 billion in the previous quarter and $3.5 billion in the same period last year.
Management Commentary Points to a Healthy Outlook
Top executives across major IT firms maintained a largely constructive tone. Companies indicated that AI-led demand is expected to support growth momentum into the final quarter of the current fiscal year.
Infosys raised its full-year revenue growth guidance to a range of 3–3.5%. The company cited improved demand from financial services, energy, and healthcare clients. It attributed this improvement to AI-led modernization deals.
HCL Tech projected revenue growth of 4–4.5% for FY25. The company maintained that its services segment revenue is expected to grow 4.75–5.25% year-on-year in constant currency terms. It also guided for an EBIT margin in the range of 17–18%.
Wipro struck a more cautious note. It forecast flat to 2% sequential revenue growth for the March quarter. This forecast includes contributions from recent acquisitions. The company's cautious outlook follows its report of deal bookings falling to a six-quarter low in the December quarter.
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