Indian markets staged a recovery on Monday as geopolitical developments, corporate earnings, and macroeconomic data shaped investor sentiment. The turnaround came after positive signals from India-US diplomatic relations, mixed corporate results from major IT companies, and encouraging inflation data that undershot estimates.

US-India Relations Boost Market Sentiment

Sergio Gor, the newly appointed US Ambassador to India, provided a significant boost to market confidence by describing India as Washington's most important ally. The ambassador confirmed that the next round of bilateral trade talks between the two nations will take place tomorrow, helping markets recover from early session weakness. This development comes at a crucial time as investors seek clarity on trade relationships amid global economic uncertainties.

Mixed IT Sector Earnings

TCS Q3 Performance

Tata Consultancy Services reported Q3 results that were broadly in line with street expectations across most parameters. However, the company's net profit was impacted by one-time labour code costs, which weighed on the bottom line despite meeting margin estimates.

HCLTech Outperforms

HCL Technologies delivered a stronger performance in Q3 FY26, posting sequential revenue growth and raising its growth guidance for the full year.

Inflation Data Surprises on Downside

India's macroeconomic indicators provided mixed signals as December inflation data came in below expectations while showing sequential acceleration.

The December CPI reading of 1.33% undershot the CNBC-TV18 poll estimate of 1.62%, providing some relief to policymakers. However, the month-on-month increase from November's 0.71% indicates emerging sequential pressures that warrant monitoring.

Global Developments Impact Sentiment

Global markets turned cautious following reports that the US Justice Department had opened a criminal probe involving Federal Reserve Chair Jerome Powell. This development has intensified concerns over potential political pressure on the central bank, adding to global market uncertainties.

Corporate and Policy Updates

Several other developments shaped market discourse throughout the day:

• Technology Sector: The Ministry of Electronics and Information Technology clarified that it has no plans to seek smartphone source code from major manufacturers like Apple and Samsung
• Energy Sector: Reliance Industries addressed market speculation by confirming its battery manufacturing plans remain on track within the established timeline
• Investment Flows: Private equity major Warburg Pincus outlined its India investment priorities, highlighting continued foreign investor interest in Indian markets

The convergence of positive diplomatic developments, mixed but largely in-line corporate earnings, and supportive inflation data helped Indian markets navigate through a complex news environment, setting a cautiously optimistic tone for upcoming sessions.

Tata Consultancy Services has announced that employee layoffs will continue in the fourth quarter without establishing specific targets for the workforce reduction process.

Workforce Restructuring Strategy

The IT services company expects ongoing employee layoffs in Q4, indicating a continuation of workforce optimization efforts. The company has chosen not to set predetermined targets for these layoffs, suggesting a more flexible approach to workforce management based on evolving business needs.

Operational Approach

By avoiding fixed targets, TCS appears to be maintaining the ability to adjust its workforce strategy according to market conditions and operational requirements. This approach allows the company to respond dynamically to business demands while managing its human resources effectively.

Industry Context

The announcement reflects ongoing adjustments within the IT services sector, where companies continue to optimize their workforce structures. TCS's decision to proceed without set targets indicates a measured approach to employee restructuring during the fourth quarter period.