Largecap Indian IT stocks, including Tata Consultancy Services Ltd (TCS), Infosys Ltd, HCL Technologies, and Tech Mahindra Ltd (TechM), experienced declines of up to 3% in trading today, July 9, 2026. The fall occurred just hours before TCS is scheduled to report its first-quarter earnings for the fiscal year.
Key Declines Among IT Giants
- TCS shares dropped 2.06% to Rs 2,016.05 on the BSE.
- Infosys saw a 2.72% decline, trading at Rs 1,040.25.
- Tech Mahindra fell 2.06% to Rs 1,428.75.
- HCL Tech also recorded a 2.17% dip, reaching Rs 1,120.50.
Investors are expressing caution, particularly as the IT sector has recently underperformed the broader market. This underperformance is largely attributed to a prevailing negative sentiment fueled by the rise of Gen AI platform companies and ongoing geopolitical uncertainties, including the Gulf-war.
Brokerage Outlook: Muted Growth and Margin Pressures
Many brokerages anticipate a soft first quarter for Tier-1 IT firms, expecting them to lag behind their Tier-2 counterparts in terms of growth. Margins across the sector are projected to face pressure due to annual wage hikes and significant investments in artificial intelligence (AI) initiatives. These impacts may be partially mitigated by currency depreciation and productivity gains.
According to Nuvama, Q1FY27 is likely to be a challenging period, with Tier-2 companies continuing to demonstrate stronger growth. Within the Tier-1 segment, Infosys is expected to lead with a modest 2.3% quarter-on-quarter constant currency (CC) growth, followed by Tech Mahindra at 1.2%. TCS is predicted to remain stable with a minimal 0.1% growth, while HCL Technologies and Wipro are both projected to report declines of 1.1% and 1.5% respectively.
Margin Expectations and Future Growth Drivers
Motilal Oswal Financial Services (MOFSL) suggests that Infosys, HCL Tech, and Tech Mahindra may see only slight sequential improvements in their margins, supported by operational efficiencies and cost control measures. Conversely, TCS's margins could decline due to its annual wage hikes. Wipro is also expected to face margin pressure from weaker operating leverage, wage increases, costs associated with deal ramp-ups, and continued AI investments.
MOFSL forecasts sequential CC revenue growth for largecap players to range from minus 1.5% to 2%. Midcap companies, however, are anticipated to outperform, with growth projected between minus 1.0% and 4.8%, driven by sustained momentum in securing large deals.
Axis Securities highlighted that despite current attractive valuations, future growth for IT firms will heavily depend on several critical factors. These include an improvement in overall demand, increased adoption of outcome-based engagement models, and sustained success in winning AI-led deals. Key indicators for assessing the pace of earnings recovery will be demand trends, discretionary spending, deal conversions and ramp-ups, AI monetization strategies, client budgets, and currency movements.