Prefer Coforge, Mphasis, Persistent shares to IT majors ahead of Q1 earnings: Analyst 

India’s IT pack may be leading the market higher ahead of the Q1 earnings season, but the Street’s real verdict will hinge on one factor: guidance. With TCS set to kick off the sector’s results cycle in two days, the recent rally in technology stocks is being viewed less as a clean vote of confidence and more as a tactical build-up before management commentary resets expectations.

That caution is especially relevant after the previous quarter, when weak outlook statements from large-cap IT companies triggered a sharp sell-off across the sector despite investor hopes of a recovery.

Guidance, not just numbers, will matter

Vishnukant Upadhyay, AVP Research and Advisory at Master Capital Services in an exclusive interview to BTTV said investors should avoid reading too much into the current bounce unless companies deliver a stronger outlook. “The things definitely will depend on the guidance,” he said, underlining that the market is unlikely to reward even decent earnings if commentary on demand remains soft.

According to Upadhyay, large-cap firms could still post "upbeat numbers," but the bigger issue is whether clients are loosening budgets, whether deal acquisition improves, and how quickly enterprises move toward AI adoption. In other words, the earnings season may be judged more on forward visibility than on backward-looking quarterly performance.

Large caps still lack conviction

The backdrop remains fragile. In the broader market, IT and banking stocks have been doing the heavy lifting even as several other sectors, including real estate, metals, pharma and infrastructure, have traded weak. That divergence suggests the current IT move may be driven partly by positioning rather than broad-based conviction.

Upadhyay pointed to a technical improvement in the sector, noting that the IT index has regained its 21-day exponential moving average in the latest session. Even so, he was clear that “conviction is still missing in a large cap IT.”

Why midcap IT may be the better bet

For investors still looking to participate in the technology trade, Upadhyay sees better risk-reward in midcap names. He specifically flagged Coforge, Mphasis and Persistent as stocks that are “looking pretty good,” suggesting that selective buying may be more prudent than taking broad exposure to frontline IT majors.

His advice to retail investors is notably cautious: stay away from large-cap IT until Q1 FY27 numbers and management commentary provide greater clarity. That stance captures the market’s current dilemma — optimism is returning, but without stronger guidance, the sector’s rally could struggle to sustain itself.