Tech Mahindra Leads IT Rally as Infosys, TCS, HCLTech Gain; Why Wipro Shares Fell

Information technology (IT) stocks emerged as the biggest drivers of Friday's market rally, with Tech Mahindra, Infosys, Tata Consultancy Services (TCS) and HCLTech posting solid gains after Tech Mahindra reported stronger-than-expected quarterly earnings.

The upbeat results lifted sentiment across the sector, helping the Nifty IT index climb over 1.5% and supporting a sharp rise in the broader market. However, Wipro bucked the trend, declining after disappointing quarterly results and a cautious business outlook.

Tech Mahindra's Strong Q1 Results Spark Rally

The biggest catalyst for the rally was Tech Mahindra's June-quarter (Q1 FY27) performance.

The company reported:

• Revenue: ₹15,711.9 crore (up 4.2% quarter-on-quarter)
• EBIT: ₹2,264 crore (up 8.6% QoQ)
• EBIT Margin: 14.4%, improving by 60 basis points

The results exceeded market expectations and marked the fourth consecutive quarter of margin expansion, reinforcing investor confidence in the company's turnaround strategy.

Deal Wins Boost Investor Confidence

Another major positive was Tech Mahindra's strong order pipeline.

The company reported:

• New deal wins worth $1.078 billion
• 33.3% year-on-year growth in deal wins
• Third consecutive quarter with over $1 billion in new business

The robust deal momentum strengthened expectations that revenue growth could continue in the coming quarters.

Infosys, TCS and HCLTech Join the Rally

The positive sentiment spread across India's leading IT companies.

Among the major gainers:

• Tech Mahindra: +2.7%
• HCLTech: +2.6%
• Infosys: Around +2%
• Persistent Systems: +1.7%
• TCS: +1.6%

Investors appeared optimistic that upcoming earnings from other large IT companies may also show resilient deal wins, improving margins and stable demand despite global economic uncertainty.

Brokerages Turn Positive on Tech Mahindra

Following the quarterly results, several brokerages maintained a constructive outlook on Tech Mahindra.

HSBC retained its 'Buy' rating with a target price of ₹1,635, citing:

• Better-than-expected revenue growth
• Continued margin expansion
• Management's confidence in achieving a 15% EBIT margin by FY27

The brokerage said Tech Mahindra's stronger execution justifies its premium valuation compared to peers.

Why Wipro Shares Fell

While most IT stocks advanced, Wipro declined nearly 2% after reporting results that missed market expectations.

Investors were disappointed by:

• Weak quarterly performance
• A subdued management outlook
• Continued concerns over slow client spending
• Delays in converting large deals into revenue
• Ongoing AI-led disruption in traditional IT services

The cautious commentary reinforced concerns that Wipro's turnaround remains slower than several of its peers.

Motilal Oswal Maintains Cautious View

Brokerage Motilal Oswal maintained a 'Neutral' rating on Wipro with a target price of ₹160, stating that the company's growth recovery remains elusive.

In contrast, the brokerage continues to favour several large IT firms, including:

• Tech Mahindra – Buy | Target: ₹1,900
• Infosys – Buy | Target: ₹1,150
• TCS – Buy | Target: ₹2,350

The brokerage believes companies demonstrating stronger execution, better earnings visibility and healthy deal pipelines are better positioned in the current environment.

Earnings Season in Focus

Friday's rally highlights that investors are rewarding companies delivering strong operational performance despite a challenging global demand environment.

With earnings from major IT firms still to come, market participants will closely watch:

• Deal wins
• Margin performance
• Management commentary
• Demand outlook

Strong execution from sector leaders could help sustain momentum in IT stocks, while companies issuing weaker guidance may continue to face selling pressure.

Key Highlights

• Tech Mahindra led IT stocks higher after reporting stronger-than-expected Q1 results.
• Infosys, TCS and HCLTech also gained as investor sentiment improved.
• Tech Mahindra posted ₹15,711.9 crore in revenue and 14.4% EBIT margin.
• New deal wins crossed $1.078 billion for the third straight quarter.
• Wipro fell after weaker earnings and a cautious business outlook.

FAQs

Why are IT stocks rising today?

IT stocks rallied after Tech Mahindra reported better-than-expected June-quarter earnings, boosting optimism for the sector's earnings season.

Why did Tech Mahindra shares rise?

The company posted strong revenue growth, improved margins and robust deal wins, increasing investor confidence in its turnaround strategy.

Why did Wipro shares fall?

Wipro reported weaker-than-expected quarterly results and issued a subdued outlook, raising concerns about growth and demand.

What was Tech Mahindra's EBIT margin?

Tech Mahindra reported an EBIT margin of 14.4%, up 60 basis points from the previous quarter.

What are analysts watching during the IT earnings season?

Investors are focusing on revenue growth, deal wins, margins and management commentary to gauge demand trends across the IT sector.