By Nandan Mandayam and Hritam Mukherjee
(Reuters) -Shares of India’s Tata Consultancy Services rose 6% on Friday, set for the best day since July, as investors overlooked the company’s tepid performance in North America and focused on the CEO’s remarks signalling a potential revival in demand.
We see more confidence in discretionary programmes as clients were taking lesser time to sign deals, CEO K Krithivasan told reporters in a post-earnings press conference on Thursday.
Krithivasan also expressed confidence that Donald Trump, set to be inaugurated as the next U.S. President later this month, would help restore client confidence and boost discretionary spending in North America.
“After years of cautious and uncertainty-laden commentary from sector bellwethers, TCS seeing early signs of discretionary spending revival is boosting sentiment in other IT firms as well,” said S Krishnakumar, director at a consulting firm Lion Hill Capital.
In addition to the economic strength and political stability under Trump in the U.S., signs of a revival in discretionary spending indicate increased spending by corporate America, which bodes well for IT companies, Krishnakumar said.
The surge in TCS, India’s top software services exporter, lifted sentiment for competitors such as Infosys, HCLTech, Wipro, and others, helping them trade in the positive on Friday.
Shares of Infosys, HCLTech and Wipro, which are due to report their third-quarter results next week, were up between 0.8% and 2.14%.
The IT sector climbed more than 2% and was an outlier in an otherwise soft market, where the country’s benchmark indexes are under corporate earnings’ pressure. [.BO]
CLSA upgraded TCS stock to “outperform” from “hold” following the results on Thursday, citing Krithivasan’s comments. The brokerage also projected a 14% earnings per share growth for fiscal year 2026, compared with an 8% average forecast for 2025.
“The improvement in discretionary spends in North America/BFSI and a faster pace of pipeline conversion bode well for growth,” Jefferies analysts said in a note.
($1 = 85.8600 Indian rupees)
(Reporting by Nandan Mandayam and Hritam Mukherjee in Bengaluru; Writing by Indranil Sarkar; Editing by Varun H K and Sherry Jacob-Phillips)
