Nifty IT index jumps 2.8% after strong TCS Q3 results. Experts see THIS Accenture connect

The Nifty IT index surged nearly 3% on Friday, driven by strong December quarter earnings reported by Tata Consultancy Services (TCS). Following the announcement, TCS share price rallied over 4%, leading the gains within the Nifty IT sector.

All components of the Nifty IT index traded positively, with TCS, LTI Mindtree, Tech Mahindra, Wipro, Infosys, and Persistent Systems emerging as the top performers. These stocks recorded gains ranging from 1% to 4%, reflecting strong investor sentiment across the sector.

Meanwhile, the Indian stock market traded lower, weighed down by weak global cues. The Nifty IT index was the sole sectoral index to remain in positive territory, while all other sectoral indices faced selling pressure.

TCS share price rally, following its strong Q3 results, bolstered sentiment across the IT sector and drove gains in the Nifty IT index. Additionally, analysts noted that upbeat earnings reported by Accenture last month, further supported investor confidence in Indian IT stocks.

“After the better-than-expected Wall Street estimates on Accenture results, the Indian IT companies were expected to deliver better quarterly numbers in Q3FY25. After the strong TCS Q3 results in 2024-25, this buzz has received a further boost, and Dalal Street is expecting the same kind of Q3 results in 2025 from other IT majors like HCL Technologies, Infosys, Wipro, etc. This is because Indian IT companies receive a good amount of business from the US markets, and Accenture has a significant role in this,” said Anshul Jain, Head of Research at Lakshmishree Investment and Securities.

As demand for Accenture services via clients adopting AI-powered tools is expected to continue, we are seeing buying buzz in the Indian IT stocks, and this rise in the Nifty IT index is an example of this, he added.

Technicals

Nifty IT index gained as much as 2.82% to a high of 44,342.95 level on Friday, surpassing the 44,000-mark.

“The Nifty IT index is oscillating around 44,000 levels. On the technical chart, the index looks bullish and can touch the 45,500 mark in the near term. The Nifty IT index has strong support at 43,100 levels. Until this support is broken, one should maintain a buy-on-dips strategy and remain bullish on major IT stocks belonging to the Nifty IT index,” said Sumeet Bagadia, Executive Director at Choice Broking.

On IT stock to buy today, Sumeet Bagadia recommended buying Tech Mahindra shares, saying, “One can initiate momentum buying in Tech Mahindra shares at current market price for the near-term target of ₹1,775 apiece. However, they must maintain a strict stop loss at ₹1,630 per share mark while taking a fresh position in Tech Mahindra shares.”

TCS Q3 Results

Tata Consultancy Services (TCS), the largest IT services company in India, reported a net profit of ₹12,380 crore in the third quarter of FY25, registering a growth of 4% from ₹11,909 crore in the previous quarter.

The IT major's revenue in Q3FY25 eased 0.4% to ₹63,973 crore from ₹64,219 crore, QoQ. Revenue in USD terms was at $7,539 million. EBIT increased 1.2% QoQ to ₹15,657 crore, while EBIT margins grew by 40 bps sequentially to 24.5%.

TCS declared a third interim dividend of ₹10 and a special dividend of ₹66 per equity share. TCS dividend record date is January 17 and the dividend payment date is February 3.

TCS management commentary was most positive over the last two years, as it guided to higher growth in CY25 than CY24, citing early signs of revival in discretionary spends.

“We view the strong deal-wins and management’s efforts to offset the BSNL revenue impact as positive triggers for TCS. The revival in developed market growth and discretionary spends marks incrementally positive signs for the industry. All along, TCS’s valuations remain attractive versus peers,” said Nuvama Institutional Equities.

The brokerage firm retained a ‘Buy’ call on TCS shares and raised the target price to ₹5,200 per share from ₹5,100 earlier.

At 9:50 AM, TCS shares were trading 4.00% higher at ₹4,197.95 apiece on the BSE.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.