'Trade deal will act as a strong trigger for market sentiment, not just for domestic investors but also for FIIs.'
Investors in India's information technology (IT) companies are likely in for more pain ahead as muted earnings for the first quarter of 2025-26 (Q1FY26) play spoilsport at the bourses in the worst-performing sector this year amid macro uncertainties. Investors, analysts suggest, can look for better opportunities in the markets as things stand.
Risks emerging from the US have left automotive investors worried. US President Donald Trump has announced 25 per cent tariffs on automotive imports, while global electric carmaker Tesla has taken its first steps towards entering India. While these developments are sentimentally negative for related stocks, it may be too early to conclude the eventual impact, analysts said.
The Nifty IT index, data shows, has outperformed the markets in each of the last four election years post the result. announcement.
'Those betting against PSUs will likely be punished in this upswing.'
IT services major LTIMindtree reported a net profit of Rs 1,100 crore for the fourth quarter of financial year 2023-24 (FY24), down 1.2 per cent year-on-year (Y-o-Y) from Rs 1,141 crore in the same quarter last financial year. Revenue grew 2.3 per cent Y-o-Y for the fourth quarter to Rs 8,892.9 crore. Sequentially, revenue was down 1.4 per cent.
IT service company Wipro on Friday reported 7.8 per cent year-on-year decline in its consolidated net profit for the March quarter to about Rs 2834.6 crore, and cautioned that the macroeconomic environment remains "uncertain". The Bengaluru-headquartered company, which recently saw a change of guard with Srinivas Pallia taking over at the helm as the new chief executive officer, has given an IT Services revenue growth guidance in the (-)1.5 per cent to +0.5 per cent band for June quarter on a constant currency basis.
Strong Q3 brings Infosys comfort amid macro risks.
In the mid-tier space, clients with weak balance sheets are likely to ask for price revision apart from delay in payment.
Top Indian IT firms, such as TCS, Infosys, and Wipro, have signalled taking aggressive cost take-out measures, including reduction in sub-contracting costs, travel expenses, freeze in salary hikes, and holding back variable payments, among others.
Among IT services firm, Cognizant witnessed over 60 per cent of its initial applications rejected, followed by Capgemini, Accenture, Wipro, and Infosys. In 2018, the top six Indian firms got just 16 per cent or 2,145 H1B work permits.
According to analysts, IT firms like Infosys, TCS and HCL Technologies are likely to benefit the most on account of larger US exposures and dollar billing.
Wipro said recently it was expecting its revenue growth to drop 2.33 per cent or stay flat between $2,015 and $2065 million.
March was the first full quarter for Infosys under its new CEO Salil Parekh.
It is not that platforms and products are something that Infosys has not tried earlier.
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