Indian IT faces near-term headwinds; Antique picks top three stocks | Markets News

Ravi Singh

5 hours ago

Indian information technology (IT) firms continue to face a challenging demand environment in the retail vertical, with growth remaining muted amid cautious client spending and tariff-related uncertainties, according to Antique Stock Broking.

US retailers saw a marginal improvement in average growth in the third quarter of calendar year 2025 (CY25), supported by strong e-commerce performance and timely promotional events, even as the overall operating environment remained mixed, according to the brokerage.

Average growth rose to 3 per cent year-on-year (Y-o-Y) in the quarter from 2.8 per cent in the previous quarter. However, retailers continue to flag consumer uncertainty, with caution around big-ticket purchases weighing on discretionary and project-led spending. In contrast, essentials and value-oriented categories have seen relatively steadier demand.

Antique noted that management commentary across US retailers remains cautious in the near term, although underlying demand is viewed as structurally intact over the medium term, contingent on improved macro visibility and easing consumer uncertainty. The Consumer Confidence Index declined in December 2025, reflecting weaker perceptions of current business and labour market conditions, while short-term expectations remained subdued. US retail sales were flat in October 2025, as strength in certain categories was offset by a decline in motor vehicle sales.
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Against this backdrop, Indian IT companies continue to report muted performance in the retail vertical. HCL Technologies and Tech Mahindra remain key exceptions, delivering relatively stronger growth supported by a disciplined approach to adopting and scaling artificial intelligence.

Overall retail technology spending remains cautious, with discretionary spends constrained by macroeconomic and tariff-related uncertainties, although the pace of decline has largely stabilised, Antique said. Clients are prioritising artificial intelligence (AI) adoption, cloud modernisation, cost optimisation, de-risking, and productivity improvements to manage volatile consumer demand and inflationary pressures. While deal pipelines remain healthy, decision-making cycles continue to be elongated, the brokerage added.

Antique added that HCL Technologies is seeing improved traction and higher deal wins driven by its artificial intelligence-led strategy and portfolio diversification, while Wipro is engaging with clients on cost- and supply chain-related opportunities as retailers reassess sourcing and operating models.

The brokerage expects near-term moderation in technology spending, given subdued consumer confidence and cautious end-demand trends, and said growth in the retail vertical for Indian IT companies is likely to remain constrained in the immediate term. HCL Technologies, Coforge, and Mphasis remain its preferred picks within the information technology sector. ==========

(Disclaimer: The views and investment tips expressed by the brokerage in this article are their own and not those of the website or its management. Business Standard advises users to check with certified experts before taking any investment decisions.)

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