CLSA remains constructive on the Indian IT sector, pointing to improving client sentiments, particularly after the recent US election outcome. The brokerage highlighted that TCS, Infosys, and Wipro are optimistic about the potential for tech budget expansion in CY25, which could revive growth. It added that BFSI furloughs in Q3 are expected to be similar to last year, while US BFSI recovery is showing signs of being more broad-based across sub-sectors.
Infosys, however, is entering its seasonally weak second half, with Q4 likely to witness a sharper dip compared to Q3. On Wipro, CLSA stated that while the stock’s re-rating prospects remain contingent on capital allocation changes, the overall outlook for the company remains subdued. Despite a cautious stance on near-term seasonality, CLSA sees TCS and Infosys benefiting from improved client spending in the coming year, particularly in the US market.
