Tata Consultancy Services shares experienced selling pressure ahead of its third-quarter earnings announcement on January 12, falling 0.81% to ₹3,182.00 on the BSE. The results will kick off India Inc's Q3 earnings season, which is being closely watched by analysts and investors as strong earnings could help offset headwinds facing the Indian stock market, including tariff-related concerns and continued FII selling.

Q3 Results Preview and Analyst Expectations

Analysts are expecting a flattish quarter for TCS due to seasonal furloughs and cautious client spending. Most IT companies are likely to report improvement in year-on-year revenue growth in Q3, though seasonal furloughs and lesser working days compared to Q2 should keep revenue growth muted on a sequential basis.

Seema Srivastava, Senior Research Analyst at SMC Global Securities, expects TCS Q3 earnings to be driven by resilient quarterly performance with muted sequential revenue growth amid rupee depreciation and cautious client spending. She noted that demand for long-term digital transformation remains intact, with the quarter expected to highlight TCS's continued focus on cloud migration, artificial intelligence, data analytics, and cybersecurity.

Key Focus Areas and Market Sentiment

Harshal Dasani, Business Head at INVAsset PMS, believes the market is less focused on absolute Q3 growth and more on signals of stabilisation. Revenue growth is expected to remain modest in constant currency terms, reflecting cautious client spending, particularly in discretionary technology budgets.

Key areas analysts will watch include:

• Management commentary on demand trends
• Visibility on deal ramp-ups
• Performance across key verticals
• Deal total contract values
• Status of overall pipeline

"Any improvement in order inflows or confidence on demand recovery can outweigh near-term softness in numbers. For investors, this quarter is about forward visibility, not backwards-looking performance," Dasani observed.

Historical Results Impact

According to analysis by Mint, TCS has fallen in three of the last five instances following quarterly results announcements. Data from Capitaline showed the stock dipped post Q2 FY26, Q1 FY26 and Q2 FY25 earnings. However, after Q3 earnings last year, TCS stock rallied almost 6.00%.

Trading Strategy and Technical Outlook

Dasani recommends trading Tata Consultancy Services as an event-risk stock rather than a pure directional bet ahead of Q3 results. He noted that TCS historically does not deliver large pre-result moves, with volatility typically emerging only after numbers and management commentary.

On technical charts, Anshul Jain of Lakshmishree identified that TCS is forming a 27-week cup and handle formation, signalling prolonged consolidation rather than trend damage. The handle has developed in a flag-like structure, reflecting controlled profit booking and strong absorption near the upper end of the base.

Jain expects that if results come in non-negative, the structure favours momentum release rather than breakdown, with a confirmed breakout from the handle potentially triggering a fresh upside leg toward the 3,600.00 zone.

Shares of IT majors Tata Consultancy Services and HCLTech traded marginally lower on January 12 ahead of their December quarter results announcement. Both companies are scheduled to report their Q3 results in post-market hours, with analysts predicting muted performance amid challenging market conditions.

TCS Trading Performance and Analyst Expectations

India's top IT services exporter TCS saw its shares decline 0.30% to ₹3,198.00 at 11 am on January 12. The stock has faced significant pressure in 2025, falling 20.40% compared to a 12.50% decline in the IT index.

Ambit Capital has highlighted near-term risks to TCS' outlook for higher international market growth in FY26 versus FY25, citing elevated ask rates of 1.50% compound quarterly growth rate over the second half of FY26.

HCLTech Results Preview

HCLTech shares traded 0.60% lower at ₹1,652.00 in morning trade on January 12. According to LSEG data, analysts expect the company to report stronger revenue growth compared to TCS.

Most brokerages do not expect HCLTech to upgrade its FY26 annual revenue forecast of 2.00% to 3.00% growth.

Sector Challenges and Market Dynamics

The broader ₹283.00 billion Indian IT industry continues facing multiple macro headwinds that are impacting sector performance. The IT index traded 0.60% lower in morning trade, reflecting widespread concerns across the sector.

Key challenges include:

• Uncertainty over US tariffs affecting client spending
• Proposed $100,000.00 visa fees creating operational concerns
• Subdued client spending amid growth worries in the US economy
• Tepid US demand and holiday-period client shutdowns

Future Outlook and AI Opportunities

Despite current challenges, there are emerging opportunities in artificial intelligence. Sector bellwether Accenture's recent earnings beat Wall Street expectations on AI-led demand, though its unchanged growth outlook underscores the cautious near-term environment.

While India has no pure-play AI firms, IT companies are beginning to shape AI strategies through acquisitions and partnerships. Brokerages expect AI momentum to build over the next six months, with demand potentially picking up into 2026.

The Indian IT sector's heavy reliance on the United States for revenue makes the world's largest economy crucial for sector performance, with companies earning a significant share of their revenue from US clients.