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Informist, Friday, Jul. 25, 2025

MUMBAI - Information technology stocks are expected to trend lower next week, tracking weakness in the broader market. Cautious management commentaries and mixed quarterly earnings amid continued macroeconomic uncertainty continue to cloud the outlook for the sector. Uncertainty over the India-US trade deal and dampened expectations of an interest rate cut by the US Federal Reserve in the near term have further weakened sentiment.

Next week, the focus will be on US President Donald Trump's Aug. 1 tariff deadline, the Fed's policy meeting, and meetings of other key central banks. Quarterly earnings announcements by global technology giants like Amazon, Apple, Meta, and Microsoft will be monitored closely by the market. The Nifty IT index is expected to find support at 35069.40 points and resistance at 36548.30 points.

On a weekly basis, the Nifty IT index has been in the red for three weeks in a row. So far this year, the sectoral index has fallen nearly 18%, against a 5% rise in the benchmark Nifty 50 and over 4% rise in the BSE Sensex. This week, the IT index fell over 4% with all its constituents declining on a weekly basis. Coforge was the worst laggard, falling more than 9% over the week, followed by Mphasis and Persistent Systems, which fell over 7% each.

Industry behemoth Infosys and mid-cap technology companies Persistent Systems, Coforge, Mphasis, and Oracle Financial Services Software announced their quarterly earnings for the June quarter this week. With this, most of the major domestic IT companies have released their financial results for the first quarter of the financial year 2025-25 (Apr-Mar).

Most companies flagged delays in client decision-making during the quarter because of macroeconomic uncertainties over US tariffs and geopolitical conflicts. Management commentary showed mixed trends, with some expecting uncertainty over tariffs to continue to affect the demand environment and client spending, while others expect things to get better in the second half of the financial year.

Sectoral major Infosys revised its guidance for revenue growth in constant currency terms in FY26 to 1-3% from 0-3% earlier. The company's June quarter performance and deal wins gave the management "better confidence", which was indicated through the upward revision of the lower end of the revenue growth guidance. However, the upper end of the guidance was kept unchanged as the company "still sees possible uncertainty on the back of tariffs," the management said in a post-earnings press conference Wednesday. 

Though HCL Technologies also raised its FY26 guidance for revenue growth in constant currency terms to 3-5%, from 2-5%, the company lowered its guidance for the earnings before interest and tax margin to 17-18% from 18-19% owing to "certain headwinds", the management said in a post-earnings call with analysts.

Among the IT companies that detailed their earnings this week, Persistent Systems reported mixed results for the June quarter with its bottom line beating analysts' estimate while the top line fell short. In constant currency terms, the company's revenue rose 3.3% on quarter. Though Coforge posted strong sequential growth in earnings, the fastest in three quarters, it failed to meet analysts' estimates for both the bottom line and the top line.

Infosys reported a decent set of numbers for the quarter, with its bottom line and top line both beating analysts' expectations. But its consolidated net profit contracted sequentially for the first time in four quarters and sales continued to grow in single digit. In constant currency terms, the company's revenue grew 2.6% on quarter.

Mphasis, on the other hand, reported muted earnings, failing to meet the Street's expectations. The company's net profit fell over 1% on quarter with revenue rising at its slowest pace in four quarters. However, in constant currency terms, the company's revenue was up 1% on quarter, unlike the sequential decline posted by most large-cap companies. Oracle Financial Services reported a sequential fall in the bottom line for the June quarter despite a rise of nearly 8% in net sales.

TOP HEADLINES

* Intellect Design Arena Apr-Jun consol PAT falls 30.2% QoQ as sales fall 3.3%
* Analyst Concall: Mphasis says co to grow at twice the pace of industry FY26
* Earnings Review: Mphasis consol PAT falls QoQ for first time in 6 quarters
* HCL Tech reappoints C Vijayakumar as MD, CEO till Mar 31, 2030
* Wipro wins multi-year deal from Saudi co for smart meter data mgmt system
* Cyient Apr-Jun consol PAT falls 9.7% QoQ as sales fall 10.3%
* Analyst Concall: Coforge positive on BFSI segment in near-, medium-term
* Google moves SC against NCLAT order on Play Store policy case
* Earnings Review:Coforge posts fastest growth in 3 qtrs, outshines most peers
* Analyst Concall: BFSI ops to lead Persistent Systems growth in FY26
* Earnings Review: Oracle Fincl Q1 consol PAT dn marginally QoQ, sales up 8%
* Analyst Concall: Infosys sees good growth in H1 amid continuing uncertainty
* Earnings Review:Persistent Systems Apr-Jun consol PAT beats view, sales miss
* Saw 100-bps impact on operating margin from wage hikes in Apr, says Infosys
* Thyagarajan to replace Kamini Shah as Birlasoft CFO from Aug 8
* Earnings Review: Infosys Apr-Jun consol PAT beats expectations but falls QoQ
* Infosys revises FY26 sales growth guidance to 1-3%, retains margin guidance
* Intellect Design wins Canadian bank's deal to accelerate expansion strategy
* Earnings Outlook: Robust banking, tech ops to drive Persistent Systems sales
* Infosys in deal to improve US-based AGCO Corp's IT infra, HR operations
* Zensar Tech Apr-Jun consol PAT rises 3.2% QoQ to INR 1.82 billion
* Latent View Analytics Apr-Jun consol PAT falls 4.9% QoQ to INR 508.35 mln
* HCL Tech signs MoU with Swiss Network in India for digital infra
* Infosys expands pact with Telstra International to drive innovation
* Earnings Outlook: Mid-cap IT cos' growth seen outperforming large-caps again
* Coforge gets BSE, NSE nod for Cigniti Tech's merger with co
* Mastek Apr-Jun consol PAT rises 13.5% on quarter to INR 920.5 mln
 

Following are the resistance and support levels for key stocks in the IT sector for next week as per calculations based on their prices on the National Stock Exchange:

End

US$1 = INR 86.51

Reported by Arya S. Biju

Edited by Rajeev Pai

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