Indian information technology stocks extended their rally on Thursday, October 15, with HCLTech, Tech Mahindra, Tata Consultancy Services and Infosys among the top gainers on the Nifty 50. The Nifty IT index rose 2.28% to 30,858, marking its fourth advance in five sessions and taking its gains over the period to nearly 11%.
The rally has gathered pace following September-quarter results from HCLTech and TCS, with HCLTech’s stronger earnings, upgraded revenue growth guidance on the lower end and improving deal momentum supporting sentiment. The broader focus on AI-led growth has also come into play, with Accenture outlining a three-year plan to move closer to $100 billion in annual revenue through legacy technology overhauls and a push to expand its mid-sized client base.
Shares of HCLTech were trading around 3.5% higher on Thursday, while those of Tech Mahindra gained about 3.1% ahead of its results announcement after market hours. TCS advanced nearly 3% and Infosys climbed around 2.7%. LTM and Wipro were also trading higher.
However, Persistent Systems and Oracle Financial Services Software trading lower. HCLTech, TCS extend gains after resultsHCLTech has been on a five-session winning streak, gaining around 14% over the period. TCS has advanced in four of the last five trading sessions, rising a cumulative 13.7% over five days.
HCLTech reported consolidated net profit of ₹5,132 crore for the September quarter, up 21.2% year-on-year and 11% sequentially, beating the CNBC-TV18 poll estimate of ₹4,963 crore. Its revenue rose 11.5% YoY to ₹35,620 crore, although it was marginally below estimates.
The company raised its FY27 revenue growth guidance to 2.5-4% in constant currency terms from 1-4% earlier. Services revenue growth guidance was revised to 3-4%, while its operating margin guidance remained unchanged at 17.5-18.5%. Earnings before interest and tax margin expanded 131 basis points sequentially to 18.2%, including the impact of restructuring costs.
Advanced artificial intelligence revenue rose 28.4% sequentially and 78% year-on-year in constant currency terms to $219 million. HCLTech added 6,450 employees during the quarter, its highest quarterly addition in 16 quarters, taking its workforce to 2.30 lakh.
TCS, which reporting September-quarter results on October 8, posted net profit of ₹13,884 crore, while revenue rose 1.3% sequentially to ₹73,188 crore. Constant currency revenue growth was 0.5%, slightly below the CNBC-TV18 poll estimate of 0.6%. TCS's annualised AI revenue crossed $3 billion during the quarter, accounting for more than 10% of overall revenue.
Deal wins stood at $9.6 billion. Why are IT stocks rising despite concerns over AI? The rally comes amid concerns over AI’s impact on traditional IT services, alongside a rotation into Indian IT stocks following a sell-off in Asian chipmakers through the course of this week.
Asian semiconductor stocks sold off sharply on Thursday after concerns were raised regarding the sustainability of debt repayments raised by companies such as CoreWeave and Oracle. That, coupled with fears of higher inflation resulting in the US Federal Reserve raising interest rates further, added to the panic across these stocks.
Shares of CoreWeave plunged 15% overnight, while those of SK Hynix in South Korea are down nearly 60% from their peak seen in June. The meltdown in the AI / semiconductor theme results in a positive readthrough for Indian IT companies, which sold off sharply through the course of the year as analysts said that they lagged behind the global AI companies as the theme developed and grew.
Tech Mahindra, Wipro results in focusTech Mahindra and Wipro will be announcing their Q2FY27 earnings numbers later today. Ahead of the results, Tech Mahindra shares were up around 3% at ₹1,622.8, and shares of Wipro were trading about 1.7% higher at ₹173.84.
Despite this five-day recovery, shares of Wipro and Infosys are down 34% and 31% so far on a year-to-date basis, while those of LTM and TCS are down 29% and 26% respectively. The recent surge seen in Tech Mahindra has taken the stock into positive territory on a year-to-date basis.