Tech Mahindra leads IT rally after strong Q1; Infosys, TCS, HCLTech gain up to 2%, Wipro falls 2%

A strong earnings surprise from Tech Mahindra, coupled with a steady stream of large deal wins by major IT companies, lifted sentiment across the technology sector on Friday. The optimism sparked broad-based buying in IT stocks, helping benchmark indices rally, with the Sensex surging as much as 800 points and the Nifty nearing the 24,300 mark.

The Nifty IT index climbed over 2% in intraday trade, led by Tech Mahindra, as investors cheered the company's strong June quarter earnings and growing optimism that demand for technology services may have bottomed out.

Among the IT heavyweights, Tech Mahindra topped the gainers' chart, rising as much as 3.5% after reporting its Q1 results. HCLTech and Tata Consultancy Services followed, gaining over 2% each. Infosys rose as much as 1.5%, while Persistent Systems, LTIMindtree, and Mphasis advanced more than 1% each.

Wipro, however, bucked the trend, falling up to 2.3%, while Coforge and Oracle Financial Services Software (OFSS) also traded lower.

What fuelled the rally in IT stocks?

The broad-based rally in the IT index was driven primarily by Tech Mahindra's better-than-expected June quarter results. The IT services major reported a 28.4% year-on-year increase in consolidated net profit to ₹1,465 crore for the quarter ended June 30, while revenue from operations rose 17.7% to ₹15,712 crore. Operating performance also improved, with EBIT margins expanding 330 basis points to 14.4%, reflecting broad-based business growth and continued execution improvements.

Investor sentiment was further supported by constructive management commentary across the sector, which eased concerns over discretionary technology spending and reinforced expectations that demand has begun stabilising after several weak quarters.

Analysts also attributed the rally to short covering following the sharp correction in IT stocks over the past few months.

Deal wins announced by leading IT companies further added to the positive sentiment.

HCLTech recently announced a new seven-year agreement with The Guardian Life Insurance Company of America to accelerate the insurer's AI-led technology and operations modernisation. The company said the expanded partnership would support Guardian's long-term business growth through AI-powered transformation.

Earlier this week, Tata Consultancy Services (TCS) announced an expansion of its two-decade partnership with global technology company ABB. Under the multi-million-dollar, multi-year agreement, TCS will deliver end-to-end global network operations through a network-as-a-service model, significantly expanding its role beyond infrastructure and application management.

While the sector remained broadly positive, Wipro shares came under pressure despite reporting double-digit revenue growth.

The company posted a marginal 0.6% year-on-year increase in consolidated net profit to ₹3,352 crore for the June quarter, while revenue from operations rose 10.6% to ₹24,479 crore. Sequentially, however, net profit declined 4.7%.

Although Wipro reported healthy large deal bookings of $1.63 billion, up 12.9% quarter-on-quarter, investors appeared disappointed with its guidance for the September quarter. The company expects IT services revenue to be in the range of $2.574 billion to $2.627 billion, implying sequential growth of between -1.5% and +0.5% in constant currency, signalling that the demand environment remains mixed.

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