Tech Mahindra, Wipro shares rally up to 7% post Q2; Nifty IT tops sectoral indices

Indian IT stocks, including TCS, Infosys, HCLTech, and Tech Mahindra, surged 11.7% in the week ending October 16, their biggest gain in 18 years, driven by strong earnings and investor interest. Tech Mahindra and HCLTech reported better-than-expected quarterly results. The rally contrasted with a 4.5% drop in the Nasdaq Composite, as US AI stocks faced a selloff. The Nifty IT index outperformed broader indices, but challenges like automation and competition persist.

Wipro reported flat sequential IT services revenue at USD 2,611.5M for Q2, with margins improving to 16.5%. Bookings fell 22.9%, with large deals down 58.6%. Guidance suggests potential revenue decline. Net income declined 4.7% sequentially. CEO highlights AI as a growth driver, but financial impact remains unclear.

Wipro's shares rose 6.2% to a two-month high after its quarterly revenue of ₹24,752.7 crore beat market expectations, despite a 1.9% drop in net profit. Core IT services revenue was $2.61 billion, with an improved operating margin. Deal bookings fell 22.9% sequentially, raising concerns about future revenue. The company guided for modest IT services revenue growth in the next quarter.

The U.S. Department of Labor (DOL) suspended PERM applications for Adobe, Cognizant, Infosys, Tata Consultancy Services, Wipro, HCL Technologies, and Capgemini. The action follows investigations into alleged fraud and worker exploitation. No fixed dates or legal basis were announced, but the suspension may last up to 180 days. Employers are advised to review compliance and prepare for audits.

Wipro (WIT) reported flat IT services revenue of $2.61B in Q2 FY2027, with AI services driving growth. Deal signings were delayed due to paperwork, and management prioritizes strategic investments over short-term margins. Operating margins rose to 16.5%, aided by cost discipline and currency effects. The company aims for long-term AI-driven growth.

Wipro reported Q2 2027 results with net income of Rs32.0 billion, operating margin of 16.5%, and gross revenue of Rs247.5 billion. IT services revenue was $2,611.5 million, with operating cash flow at 165.8% of net income. The company secured 12 new deals and expects IT services revenue of $2,571M to $2,625M in Q3.