In a boost to the Indian IT sector, market leaders Tata Consultancy Services (TCS) and Infosys witnessed a rally of over 4% on Friday following the release of quarterly reports that exceeded market expectations. The positive performance has alleviated concerns surrounding the industry, which has been grappling with apprehensions of sluggish demand.
TCS, the market leader, experienced a more than 4% share surge, while Infosys, the second-largest player, saw a remarkable jump of over 6%. The stellar performance in the third quarter, marked by larger-than-expected revenue growth, has provided optimism about the sector’s resilience amid challenges.
TCS and Infosys indicated that the overall demand situation had not deteriorated further, offering a reassuring outlook. Infosys noted that client behavior remained unchanged, signaling stability after several months of warnings about clients altering or postponing contracts.
The positive momentum extended to the broader market, with the Nifty IT index surging by 4.5% to reach a 21-month high. Other major players in the sector, including Wipro and HCLTech, also witnessed gains of around 4% and 3%, respectively. This collective upswing reflects the renewed confidence in the IT industry’s ability to navigate challenges and sustain growth.
Apurva Prasad, Vice President of Institutional Research at HDFC Securities, remarked, “The results at Infosys and TCS came in a lot better than initially feared by the Street.” He highlighted the potential for an improved fiscal year exit for both companies, noting the trajectory of the worst in demand potentially bottoming out and a ramp-up in major deals.
Infosys shares soared by 6.7%, reaching their highest point since March 2022 and marking their best performance since July 2020. While slightly lower, TCS shares still demonstrated a substantial increase of 3.8%.
The positive quarterly reports prompted at least 10 analysts to upgrade their rating on Infosys’ stock, while eight analysts upgraded their rating on TCS, according to data from the London Stock Exchange Group (LSEG). The upbeat sentiment bodes well for the Indian IT sector, signaling resilience and adaptability in the face of evolving market dynamics.
