IT shares under pressure on mixed TCS Q1 numbers; Nifty IT index down 2%

TCS, Infosys, Wipro, LTIMindtree, Tech Mahindra, HCL Technologies and Persistent Systems are down in the range of 1% to 2%.

Information technology (IT) shares price

 

Shares of information technology (IT) companies were under pressure on Friday, with the Nifty IT index falling 2 per cent on the National Stock Exchange (NSE) in intra-day trade after the sector giant Tata Consultancy Services (TCS) reported a mixed set of numbers for the quarter ended June 2025 (Q1FY26).

 

TCS, Infosys and Wipro were down 2 per cent each on the NSE. LTIMindtree, Tech Mahindra, HCL Technologies and Persistent Systems were down 1 per cent each.

 

At 09:34 AM; the Nifty IT index was down 1.2 per cent, as compared to 0.25 per cent decline in the Nifty 50. Thus far in the calendar year 2025, IT index have performed in line with the benchmark index, gaining 6.5 per cent during the period.

 

Brokerages view on TCS post Q1 results

 

TCS reported a mixed bag quarter with weak revenues in Q1 due to continued global macroeconomic and geopolitical uncertainties causing a demand contraction. Moreover, TCS’s revenue decline was also triggered by degrowth in its largest geographies including North America and the UK where it fell by 2.7 per cent and 1.3 per cent year-on-year (YoY). 

 

Despite demand contraction in Q1 which impacted utilization, management remains optimistic about FY26 to outperform FY25 in International revenues (as Domestic revenues will be down due to large BSNL deal ramp down seen in Q1), driven by macro stability in H2.

 

Deals continue to be delayed/ paused and decision making cycles remain stretched. Only silver lining this quarter was healthy deal total contract value (TCV), headcount addition and commentary from the management wherein international revenue is expected to be better than FY25, ICICI Securities said in a note.  ALSO READ |  TCS stock breaks near-term support post Q1 show, can dip another 5%; charts 

Furthermore, amid broader demand softness, increased traction is seen for AI/GenAI engagements in the areas of industry/domain specific solutions and modernisation as clients shift their focus from use case based approach to a ROI led scaling of AI. 

 

ICICI Securities believes going ahead pipeline conversion and execution would be key monitorables which would be a function of favorable macroeconomic and geopolitical environment.

 

According to analysts at Motilal Oswal Financial Services, growth for TCS remains elusive. That said, sequentially, the headwind from the BSNL ramp-down is now manageable, and there is enough slack in the pyramid to drive margin gains through the year. The brokerage firm has maintained its estimates for FY26/FY27, as slightly lower growth is offset by one-off interest income due to income tax refunds.  ALSO READ | HCL Tech Q1 preview: What to expect amid tariff jitters, seasonal weakness 

Choice Institutional Equities expects TCV-to-revenue conversion risks persist amid client spending delays with caution being maintained even by BFSI clients (mainly in Europe as N. America & UK BFSI spends are stable). Consumer, Pharma industries are facing delays with respect to supply chain & higher R&D costs; Manufacturing is investing in tech debt reduction while Energy & Utilities are scaling back on policy tensions. In Healthcare, payers are trying to optimize costs. Med-tech industry undergoing demand pressure & regulatory scrutiny, the brokerage firm said.