IT stocks emerged as the biggest drivers of Friday’s market rally, pushing the Nifty IT index up more than 1.5% and helping the Sensex surge over 550 points in early trade.
Tech Mahindra led the gains, rising around 2.7%, followed by HCLTech (2.6%), Infosys (around 2%), TCS (1.6%) and Persistent Systems (1.7%). The rally came after Tech Mahindra reported stronger-than-expected June quarter revenue growth and margin expansion, boosting optimism around the sector’s earnings season.
However, Wipro bucked the trend, falling around 2% after its June-quarter earnings disappointed Street expectations and the company issued a weak outlook.
TECH MAHINDRA’S STRONG Q1 SPARKS IT RALLY
The biggest trigger for Friday’s rally was Tech Mahindra’s June-quarter earnings.
The company reported consolidated revenue of Rs 15,711.9 crore, up 4.2% sequentially, beating analysts’ estimates of Rs 15,486 crore. EBIT rose 8.6% quarter-on-quarter to Rs 2,264 crore, while EBIT margin improved by 60 basis points to 14.4%, marking the fourth straight quarter of margin expansion.
Perhaps the biggest positive was the company’s deal pipeline. Tech Mahindra reported new deal wins worth $1.078 billion, up 33.3% year-on-year, extending its streak of billion-dollar quarterly deal wins to three consecutive quarters.
These numbers reinforced investor confidence that the company’s turnaround strategy is gaining traction.
BROKERAGES SEE BETTER GROWTH
HSBC retained its ‘Buy’ rating on Tech Mahindra with a target price of Rs 1,635, saying the company exceeded expectations on revenue growth while maintaining its margin improvement trajectory.
The brokerage noted that management’s target of achieving a 15% EBIT margin by the end of FY27 remains achievable, and stronger growth than peers justifies the stock’s premium valuation.
The positive read-through also lifted other frontline IT names including Infosys, TCS and HCLTech, as investors bet that the sector’s earnings season may prove better than feared.
WHY WIPRO IS FALLING
While most IT stocks rallied, Wipro was the biggest loser on the Nifty IT index.
The stock declined nearly 2% after the company reported quarterly earnings that missed expectations and issued a subdued outlook.
The weak guidance reinforced concerns over sluggish client spending, delays in converting large deals into revenue and the impact of AI-led disruption on traditional IT services. Investors viewed the commentary as a sign that Wipro’s recovery continues to lag peers.
MOTILAL OSWAL REMAINS CAUTIOUS ON WIPRO
Motilal Oswal, in its latest morning note, said Wipro’s “growth recovery still remains elusive,” highlighting that the company’s turnaround is yet to gain momentum. The brokerage maintains a ‘Neutral’ rating on Wipro with a target price of Rs 160, implying limited upside from current levels.
In contrast, the brokerage remains constructive on several large IT companies. It has a ‘Buy’ rating on Tech Mahindra with a target price of Rs 1,900, Infosys with a target price of Rs 1,150 and TCS with a target price of Rs 2,350, reflecting its preference for companies with stronger earnings visibility and execution.
EARNINGS SEASON NOW IN FOCUS
Friday’s rally indicates that investors are rewarding companies that are delivering stronger execution despite a challenging demand environment.
The sharp rise in Tech Mahindra has also raised expectations for upcoming earnings from sector heavyweights such as Infosys, TCS and HCLTech. If these companies report resilient deal wins, improving margins and stable management commentary, the IT sector could continue to outperform in the near term.
However, Wipro’s results also serve as a reminder that demand remains uneven across the industry, and companies with weaker execution or cautious outlooks could continue to face pressure.
