Nifty IT index snaps 3-day losing streak, jumps 2% led by TCS, HCL Tech

IT stocks in demand: Tata Consultancy Services (TCS), Tech Mahindra, LTM, HCL Technologies and Mphasis gain 3 per cent each in intra-day deals on Friday.

Information technology (IT), Nifty IT index movement

 

Shares of information technology (IT) companies were back in demand, with the Nifty IT index jumping 2 per cent to an intra-day high of 31,799 on the NSE in Friday’s intra-day deals, snapping its 3-day losing streak. The Nifty IT index bounced back 24 per cent from its July low.

 

The IT index has outperformed the market on 16 occasions in the past 28 trading days. Currently, Nifty IT quotes at its highest level since April 21, 2026. It hit a 52-week high of 40,301.40 on February 3, 2026.

 

At 10:09 AM, the Nifty IT index was the top gainer among sectoral indices up 1.8 per cent at 31,658.40, compared to 0.09 per cent decline in the Nifty 50.

 

 

Tata Consultancy Services (TCS), Tech Mahindra, LTM, HCL Technologies and Mphasis were up 3 per cent each in intra-day deals on Friday. These stocks bounced back between 24 per cent and 32 per cent from their respective 52-week lows.

 

Kotak Institutional Equities view on IT Services

 

The Indian IT services sector delivered a mixed performance in the April to June 2026 quarter (Q1FY27), as geopolitical tensions, an uncertain macro and client- and vertical-specific headwinds impacted demand and, in select cases, delayed deal closures and ramp-ups. AI deflation headwinds have started to take hold. 

 

Despite these headwinds, margin performance is resilient, but increasingly requires aggressive cost-optimization measures. Incumbents (large Tier-1 IT firms) were hurt more by the challenges. Infosys cut guidance. Challengers fared better. After the run-up in stock prices, the risk-reward is in balance from being attractive, said analysts at Kotak Institutional Equities in the IT services report.

 

Indian IT faces headwinds from various directions—(1) moderation in the demand environment due to elevated macro uncertainties and continuing geopolitical tensions, (2) AI-linked revenue deflation, (3) intense competition, (4) continuing GCC shift, (5) spending shift away from services toward AI, hardware and software and (6) sector-specific challenges such as in healthcare payer and automotive, which can impact discretionary spending.

 

According to analysts, firms need to execute well on both defending share in existing business and winning new deals. Both are challenging in the current environment. Healthy revenue growth amid modest industry growth requires strong execution on both these axes. Luck also plays a role. Factors such as irrationally competitive intensity in select deals, spending cuts and insourcing in select clients (especially top accounts) can impact revenue growth even with strong execution, the brokerage firm said.

 

After a volatile March 2026 quarter (Q4FY26), performance was mixed in Q1FY27.  July to September quarter (Q2FY27) will witness some impact of continuing geopolitical tensions. Analysts at Kotak Institutional Equities believe macro uncertainty has reduced, which will help drive away deal delays. Analysts expect 0-2 per cent sequential growth for Tier-1 IT. Among mid-tier, Persistent will lead revenue growth from ramp-up of hi-tech mega deals. They expect moderate-to-healthy growth in other mid-tiers.  Check Q1 Results Today 

HCL Tech, LTM rebound 33% from 52-week lows

 

Share prices of HCL Technologies and LTM rebounded from their respective 52-week lows. HCL Tech hit an intra-day high of ₹1,369, bouncing back from ₹1,030 and LTM from ₹3,528 to ₹4,676.80 on the NSE.

 

HCL Tech continues to focus on scaling up GenAI through strategic partnerships, driving digital transformation across clients' applications and data platforms. The management reaffirmed its FY27 revenue growth guidance of 1 per cent to 4 per cent in constant currency (CC) and 1.5 per cent to 4.5 per cent for the Services business in CC, while maintaining its earnings before interest and tax (EBIT) margin guidance of 17.5 per cent to 18.5 per cent, Axis Securities said in the Q1 result update.

 

The outlook is supported by strong deal pipeline across business verticals, continued AI implementation, and strategic partnerships. The brokerage firm believes HCL is well positioned for a stronger recovery following its restructuring initiatives and wider AI adoption across business verticals, supported by a stable macroeconomic environment. However, the stock is trading above the analyst’s target price of ₹1,315 per share.

 

Meanwhile, analysts at Choice Institutional Equities remain positive on LTM’s medium-term outlook, supported by its Business AI strategy, verticalised SLMs, agentic AI capabilities, and outcome-based pricing initiatives. However, successful AI monetisation, adoption of Blueverse Currency, and realisation of Randstad-related synergies will be key determinants of sustained growth, margin expansion and potential valuation re-rating. The brokerage firm has an ‘ADD’ rating on LTM with a target price of ₹4,700 on the basis of FY28E EPS.  ===========================================================  Disclaimer: View and outlook shared on the stock belong to the respective brokerages and are not endorsed by Business Standard. Readers discretion is advised.