Tata Consultancy Services and HCL Technologies reported weaker-than-expected quarterly results, triggering a selloff in India’s IT sector and impacting broader market indices. The downturn reflects growing concerns over global demand for IT services.
- TCS reported 4.8% YoY revenue growth, below the 6.2% consensus
- HCL Tech grew 5.3%, missing the 6.8% forecast
- Nifty IT sector underperformed by 2.5% on the day
- Nifty 50 (NSEI.NS) dropped 1.2% following the results
- Full-year sector growth forecast revised to 12.3% from 14.5%
- Investor sentiment shifted toward defensive stocks like ITC.NS
Tata Consultancy Services (TCS.NS) and HCL Technologies (HCLTECH.NS) delivered earnings below forecasts, marking a notable setback for India’s technology sector. TCS reported a 4.8% year-on-year revenue growth, falling short of the 6.2% consensus estimate, while HCL Tech posted a 5.3% increase, lagging behind the anticipated 6.8%. Both companies cited slower-than-expected client spending and delayed project rollouts, particularly in North America and Europe. The results come amid broader concerns about sluggish global IT demand, with enterprises reining in technology budgets amid macroeconomic uncertainty. The performance of these two IT heavyweights, which together account for over 35% of the Nifty IT Index, has triggered a sharp market reaction. The broader Nifty 50 index (NSEI.NS) dipped 1.2% in early trading, with the IT sector underperforming by nearly 2.5%. Despite strong growth in some segments like cloud and digital transformation, the overall revenue trajectory for Indian IT firms has cooled. ITC.NS, though not an IT firm, saw its stock react to the broader market sell-off, dropping 0.7% as investor sentiment shifted toward defensive assets. Analysts now revise full-year growth forecasts for the sector downward, with consensus revenue growth expectations now at 12.3% for FY2026, down from 14.5% in late 2025. The weak results are expected to influence short-term trading strategies, particularly for funds tracking Indian equities. Investors are now reassessing exposure to cyclical sectors, with a growing preference for consumer staples and financials. The impact is particularly acute for passive funds and ETFs weighted toward large-cap IT stocks.