TCS and HCLTech shares dip ahead of Q3 results as brokerages flag muted IT demand

• What happened: Shares of TCS and HCLTech traded slightly lower on 12 January as markets awaited their Q3 FY26 results.
• Why it matters now: Brokerages expect a soft quarter due to weak US spending and holiday shutdowns, setting the tone for the Indian IT earnings season.
• What changes for people: Short-term stock volatility and cautious outlooks may influence investor positioning in large-cap IT.
• Who is affected: Shareholders, IT sector analysts, clients in the US and Europe, and domestic equity markets watching sector trends.

The shares of Tata Consultancy Services (TCS) and HCLTech were marginally lower in early trade on Friday (12 January), with investors bracing for the first major IT earnings release of the quarter. Both companies will announce their Q3 results post-market, a print closely watched for signals on global tech spending.

Brokerages covering the sector have projected a muted performance for Indian IT firms through the December period, citing soft US demand, delayed decision-making, and year-end client shutdowns. The trend is expected to weigh on revenue growth and commentary for FY26.

Stock movement ahead of results

At around 11:00 AM, TCS shares were down 0.3 percent at Rs 3,198, while HCLTech also traded slightly lower on day's performance. Analysts tracking the stock said the movement reflects earnings uncertainty rather than structural weakness.

What brokerages are expecting

According to multiple research notes reviewed by market desks, analysts forecast low single-digit revenue expansion for large-cap IT firms in Q3. For TCS, consensus models indicate around 4.2 percent YoY revenue growth, slower than 5.6 percent in the same period last year.

Most brokerages expect:
• Muted discretionary tech spending in the US and Europe
• Lower conversion of deal wins into revenue
• Holiday-season shutdowns impacting throughput
• Potential margin support from operational efficiency

However, several notes also highlight the AI adoption cycle as a medium-term positive, with large IT players positioning heavily on genAI transformation, cost optimization, and cloud modernization strategies.

Why this matters for markets

IT services firms form a significant share of India’s market capitalization, and their results often influence:
• Nifty and Sensex sector rotation
• Institutional fund flows
• Export-linked earnings expectations

Weak prints from early reporters like TCS typically shape sentiment for peers such as Infosys, Wipro, Tech Mahindra, and LTIMindtree throughout earnings week.

Expert viewpoint

Market strategists note that Indian IT remains in a cyclical cooling phase, but add that pipeline commentary, large deal visibility, and pricing trends will matter more than headline revenue. Analysts also say that if AI-led demand accelerates into 2026, growth multiples may rebound faster than feared.