Sensex rallies on TCS revenue beat, but posts weekly loss
Indian benchmarks recovered from a midweek geopolitical sell-off on the back of Tata Consultancy Services earnings, though the rally's durability hinges on upcoming tech results and crude prices.
Indian equities rebounded on Friday, with the Sensex climbing 1.08% to 77,569.39 and the Nifty 50 adding 1.02% to 24,206.90. The recovery followed a sharp midweek sell-off driven by renewed US-Iran military strikes, though the two-day bounce was insufficient to prevent a weekly decline of roughly 0.2% for both benchmarks.
The turnaround was led by Tata Consultancy Services after its first-quarter revenue of $7.62 billion marginally beat expectations, rising 2.7% year-on-year. Reports of ongoing diplomatic talks between Washington and Tehran despite the recent hostilities further eased selling pressure that had pushed crude oil prices from $72.76 to $76.34 over the week.
While the revenue figure suggested tech demand is not as weak as feared, TCS profits fell 1.3% sequentially and 2.2% annually, with operating margins contracting 130 basis points to 24%. The company announced a dividend of ₹12 per share.
Investors will now look to earnings from HCL Technologies on July 13, followed by Wipro and Tech Mahindra on July 16, to validate the sector's rally. Prasenjit Paul, fund manager at 129 Wealth and research analyst at Paul Asset, warned that structural disruption from artificial intelligence could automate traditional IT services and erode the valuation premiums of large technology companies.
Outside of technology, real estate was the standout performer, with the BSE Realty index gaining 5.4% on the week. Pratyush Pandey, founder of AARE Consulting, attributed this resilience to healthy residential demand, strong office leasing and sustained infrastructure investment. Conversely, defensive sectors like FMCG fell 1.2% as investors rotated into riskier assets, a shift Singla linked to profit-taking after earlier gains.
Broader market direction next week will depend on a wave of large-cap earnings, including HDFC Life Insurance, Jio Financial Services and JSW Steel. According to a recent JPMorgan report, Nifty 50 earnings are projected to grow 5% year-on-year in the June quarter, driven by financials, metals and industrials. However, elevated oil-linked raw material costs threaten to offset revenue gains supported by credit growth and a weaker rupee.
India's modest weekly underperformance contrasts with broader regional trends, as Singapore and Hong Kong gained 4.3% and 3.5% respectively, while South Korea's Kospi plunged 7.6%.
