Archive · 5 Jan 2026
Indian IT Sector Shows Stability in Q3 FY26
Indian IT companies are expected to show steady performance in the third quarter of the financial year 2026.
This is because of specific deals and company efforts, rather than a big increase in overall demand.
Some companies, like HCL Tech, are expected to do better than others.
The money these companies make and how much they keep after expenses will stay about the same, with some help from the weaker Indian rupee and improvements from artificial intelligence.
However, seasonal factors like holidays and fewer working days might slow down growth.
Overall, the IT sector is expected to improve next year, with AI helping to boost growth.
Meanwhile, sectors like EMS, telecom, industrials, and retail are expected to perform better due to improving economic conditions, while sectors like oil & gas, IT services, and others may lag behind.
Large-cap IT companies expected to post modest sequential revenue growth of 0.3–2.2% in Q3 FY26.
Performance driven by deal ramp-ups and company-specific factors, not broad-based improvement in client spending.
HCL Tech expected to outperform peers, while TCS and Infosys may report softer sequential growth due to furlough-related headwinds.
Operating margins expected to remain range-bound, with currency tailwinds and AI productivity providing some cushion.
Headcount trends remain subdued, with companies hiring freshers to rebalance their workforce.
- Who
- Large-cap domestic IT services companies, including HCL Tech, Wipro, TCS, Infosys
- What
- Modest sequential revenue growth of 0.3–2.2% in Q3 FY26
- When
- December quarter (Q3 FY26)
- Where
- India
- Why
- Deal ramp-ups, company-specific factors, BFSI execution, and seasonal furloughs
Optimistic View
Pessimistic View
Earnings Growth
Optimistic View
Sectors like EMS, telecom, industrials, and retail are expected to deliver stronger earnings growth over the next two years due to improving macroeconomic conditions.
Pessimistic View
Sectors like oil & gas, IT services, power utilities, FMCG, and auto are likely to lag in earnings growth due to sector-specific challenges.
- Expected Performance
- Modest sequential revenue growth of 0.3–2.2%
- Key Drivers
- Deal ramp-ups, company-specific factors, BFSI execution
- Margin Expectations
- Range-bound, with currency tailwinds and AI productivity providing some cushion
- Revenue Growth
- Varies by company, with HCL Tech leading at 2.3%
- Hiring Trends
- Subdued, with companies hiring freshers to rebalance workforce
- Currency Impact
- INR depreciation benefits top-line and margins
- Sector Outlook
- Recovery expected in CY26, with AI playing a big role in boosting growth
- Earnings Growth Projection
- Nifty 50 earnings growth of around 16% CAGR over FY26-28
- Macro Parameters
- WPI and nominal GDP growth expected to normalize in FY27
Sources
IT sector to maintain resilience led by AI demand in Q3
Markets to watch out for macro signals, global cues and FII flows this week
Indian IT Sector: Q3 to reflect stability, not pickup, for IT firms
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TCS, Infosys, HCL Technologies: How to trade these 3 buzzing largecap IT stocks
Business updates to keep these 5 retail stocks in focus
Strong Q2FY26 earnings set stage for India Inc growth momentum in third quarter
EMS, Telecom, Industrial and Retail sectors to deliver strong earnings growth over next 2 years: Report
IT Q3 preview: Cautious optimism amid seasonality; TCS, HCL Tech, TechM, Infosys top picks
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