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Informist, Friday, Oct. 24, 2025

MUMBAI – Information technology stocks are expected to consolidate in the near-term, after a bullish run this week, as concerns about revival in IT spending by clients amid a challenging macroeconomic environment persist. Despite the slightly better earnings in the September quarter with strong deal wins, the outlook for 2025-26 (Apr-Mar) remains sluggish amid cautious client spending and the ongoing impact of artificial intelligence-driven productivity gains, which are beginning to compress traditional growth avenues, Goldman Sachs was cited as saying in a media report Monday.

Next week, investors will focus on the outcome of the US Federal Reserve's two-day policy committee meeting scheduled on Oct. 28–29. The central bank is widely expected to continue its rate-cut journey in the latest meeting, according to analysts.

On Friday, the US Labour Department released the US consumer price index report for September, which was delayed because of the US government shutdown. The headline and core CPI increased 0.3% and 0.2%, respectively, on a monthly basis in September, taking the annual inflation rate to 3%. This was just below the 0.4% headline CPI and 0.3% core inflation economists polled by Dow Jones had expected. The rate of inflation in the 12 months ended September was expected to rise 3.1%, according to the Dow Jones poll. The report is the first official economic data the US government has published since it shut down earlier this month and has further raised investors' optimism that the central bank will lower its key interest rate further.

Developments in the India-US trade negotiations will also be closely watched, as both countries edge closer to finalising a trade deal. On Thursday, the Nifty IT index crossed the 36000 level after a month on rising hopes that both countries will finalise a deal at the Association of Southeast Asian Nations summit later this month, which could reduce US tariffs on Indian goods to 15–16% from the current 50%. However, Union Commerce and Industry Minister Piyush Goyal Friday said that India will neither sign any trade agreement in haste nor will let any trade partner dictate its relations with other nations, amid the country's ongoing trade talks with major partners, including the US.

"On the daily chart, the (Nifty IT) index opened gap-up on Thursday and formed an inside bar pattern on Friday, indicating short-term consolidation. In the coming week, some profit booking is likely, with the index expected to fill the gap towards 35,550–35,150, which remains a key support zone," Ashish Sherigar, technical analyst at NVS Brokerage, said. This week, the Nifty IT index rose 3% compared to the 0.3% rise in the benchmark Nifty 50 and the Sensex. The sectoral index saw a bullish weekly close, moving just above the 20-week exponential moving average at 35839 and settling near its downward trend line around 35986, Sherigar said. He expects the sectoral index to face strong resistance at 37000 levels. "A sustained close above this level (37000) could trigger further upside towards 38,000," he added.

On the earnings front, barring KPIT Technologies and Mphasis, all other IT companies that are a part of the Nifty 200 index have announced their September quarter earnings in the past three weeks. Of the companies that have announced their earnings so far, Infosys, LTIMindtree, Persistent Systems, and Tata Technologies reported better-than-expected top line and bottom line for the quarter. Though Tata Elxsi's top line for the September quarter beat analysts' view by a slight margin, its bottom line was in line with the Street's view.

Tech Mahindra and Wipro, on the other hand, reported lower-than-expected earnings, with both top line and bottom line failing to meet the Street's view. Though HCL Technologies and Tata Consultancy Services managed to beat the Street's view on top line for the reporting quarter, they failed to meet the estimates for the bottom line. Coforge beat analysts' estimate for bottom line but failed to meet the top line view by a slight margin. Oracle Financial Services Software reported an over 3% and around 15% sequential fall in its consolidated net sales and net profit for the September quarter, respectively. No estimates on the company's September quarter earnings were available with Informist.

Next week, Mphasis will announce its September quarter earnings. The information technology services and consulting company is expected to see a slight recovery in its earnings for the quarter after a subdued June quarter, according to analysts. According to an average of estimates from 15 brokerages, the company's consolidated net profit is expected to rise nearly 5% sequentially to INR 4.63 billion, compared to a 1% decline in the trailing quarter. Its consolidated revenue is expected to rise nearly 4% on quarter to INR 38.77 billion, compared to a 0.6% sequential rise in the June quarter. KPIT Technologies is yet to announce the date for its September quarter earnings announcement.

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

End

Reported by Arya S. Biju

Edited by Ashish Shirke

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