IT stocks led the Indian stock market higher on Friday as strong quarterly earnings from Tech Mahindra boosted investor confidence across the technology sector. The rally pushed the Nifty IT index up by more than 1.5% and helped the Sensex climb over 550 points in early trading.

While Tech Mahindra, Infosys, Tata Consultancy Services (TCS) and HCLTech posted solid gains, Wipro moved in the opposite direction after reporting weaker-than-expected quarterly results and issuing a cautious business outlook.

Tech Mahindra Leads IT Rally After Strong Q1 Performance

Tech Mahindra emerged as the biggest gainer among large-cap IT companies, with its shares rising nearly 2.7%.

The company reported consolidated revenue of ₹15,711.9 crore for the June quarter, marking a 4.2% sequential increase and surpassing market expectations. Operating performance also improved, with EBIT rising 8.6% quarter-on-quarter to ₹2,264 crore. Its EBIT margin expanded by 60 basis points to 14.4%, extending its margin improvement streak to four consecutive quarters.

Another major positive was the company’s robust deal pipeline. Tech Mahindra announced new deal wins worth $1.078 billion during the quarter, representing a 33.3% year-on-year increase. It also marked the third consecutive quarter in which the company secured more than $1 billion in new business, strengthening investor confidence in its ongoing turnaround strategy.

Infosys, TCS and HCLTech Join the Rally

Positive sentiment surrounding Tech Mahindra spread across the broader IT sector.

Infosys gained around 2%, while HCLTech climbed approximately 2.6%. TCS also advanced about 1.6%, with Persistent Systems adding nearly 1.7%.

Investors viewed Tech Mahindra’s performance as an encouraging signal ahead of earnings announcements from other major IT companies. Strong deal wins, improving operating margins and resilient business demand have raised expectations that India’s leading technology firms could deliver better-than-anticipated quarterly results.

Brokerages Remain Positive on Tech Mahindra

Several brokerage firms responded positively to Tech Mahindra’s quarterly performance.

HSBC retained its ‘Buy’ rating on the stock with a target price of ₹1,635. According to the brokerage, the company’s stronger revenue growth and continued margin expansion support its long-term earnings outlook.

The brokerage also believes Tech Mahindra remains on track to achieve its target of a 15% EBIT margin by the end of FY27, adding that its improving execution justifies a premium valuation compared to peers.

Why Wipro Shares Declined

Unlike most technology stocks, Wipro ended up among the biggest losers in the IT sector.

The company’s shares fell around 2% after it reported June-quarter earnings that failed to meet market expectations. Its management also issued a subdued business outlook, raising fresh concerns over growth prospects.

Investors remained cautious as the company highlighted challenges such as slower client spending, delays in converting large deals into revenue and the evolving impact of artificial intelligence on traditional IT services.

The weaker guidance reinforced the view that Wipro’s recovery continues to lag behind several of its industry peers.

Brokerage View on Wipro

Motilal Oswal maintained a ‘Neutral’ rating on Wipro with a target price of ₹160.

The brokerage stated that the company’s growth recovery remains uncertain and believes its turnaround has yet to gather meaningful momentum.

In comparison, the brokerage continues to favour several other large-cap IT companies. It has maintained ‘Buy’ ratings on Tech Mahindra with a target price of ₹1,900, Infosys with a target price of ₹1,150 and TCS with a target price of ₹2,350, citing stronger earnings visibility and execution capabilities.

Focus Shifts to Upcoming IT Earnings

Friday’s market performance highlighted investors’ preference for companies delivering consistent earnings growth despite a challenging demand environment.

Tech Mahindra’s results have raised expectations for upcoming earnings announcements from Infosys, TCS and HCLTech. Market participants will closely monitor deal wins, margin performance and management commentary to assess whether the broader IT sector can maintain its recent momentum.

At the same time, Wipro’s results underline that demand conditions remain uneven across the industry, meaning companies with weaker execution or cautious guidance could continue to face pressure in the coming quarters.

FAQs

1. Why did IT stocks rise today?

IT stocks gained after Tech Mahindra reported stronger-than-expected June-quarter earnings, boosting investor confidence across the sector.

2. Why did Tech Mahindra shares rally?

The company posted better revenue growth, improved operating margins and reported over $1 billion in new deal wins for the third consecutive quarter.

3. Which IT stocks gained the most?

Tech Mahindra led the rally, followed by HCLTech, Infosys, TCS and Persistent Systems.

4. Why did Wipro shares fall?

Wipro declined after reporting weaker-than-expected quarterly earnings and issuing a cautious outlook for future growth.

5. What concerns did Wipro highlight?

The company pointed to slower client spending, delays in converting deals into revenue and the impact of AI-driven changes in the IT services industry.

6. What is Tech Mahindra’s reported EBIT margin?

The company reported an EBIT margin of 14.4% for the June quarter.

7. What were Tech Mahindra’s new deal wins?

Tech Mahindra announced new deal wins worth $1.078 billion during the quarter.

8. Which brokerages remain positive on Tech Mahindra?

HSBC maintained a ‘Buy’ rating, while Motilal Oswal also continues to recommend the stock.

9. What are investors watching next in the IT sector?

Market participants are focused on upcoming earnings from Infosys, TCS and HCLTech for signs of sustained growth and strong deal activity.

10. What does the latest rally indicate for the IT sector?

The rally suggests investors are rewarding companies with stronger financial performance, improving margins and better earnings visibility despite a challenging business environment.