Both companies will announce their March quarter earnings on April 12.
Technology stocks fell for second consecutive session on April 11 with the Nifty IT index falling 0.78 percent as traders remained cautious ahead of earnings by TCS and Infosys.
Infosys and TCS fell 1 percent each today, in addition to 1 percent and 2.5 percent decline in previous session respectively. However, both stocks rallied more than 35 percent in last one year amid rupee depreciation, strong US economy, digital business and healthy deal wins.
Both companies will announce their March quarter earnings on April 12.
"We will be looking at results of India's major IT companies namely Infosys, TCS, Wipro, and Tech Mahindra. These companies are expected to post strong revenue growth in the seasonally-weak fourth quarter on the back of large deal wins, but margins could come under pressure as the cost of expanding headcount in the US begins to bite," Sidharth Sedani of Anand Rathi told Moneycontrol.
Infosys is expected to report steady growth in January-March quarter with dollar revenue growth at around 2-2.5 percent over the previous quarter. Largely brokerages expect Q4 to be better than third quarter due to ramp-up in large deals.
The key thing to watch out for would be its guidance for the financial year 2019-20. Analysts largely expect constant currency revenue growth guidance at around 8-10 percent but some analysts feel the company could surprise with 9-11 percent guidance for the year, but EBIT margin guidance may see some cut of largely 100bps at 21-23 percent for FY20 against 22-24 percent in FY19.
In case of TCS, key things to watch out for are company's FY20 outlook, BFSI (banking, financial services and insurance) & retail growth, IT budget trends for CY19, growth in digital, outsourcing in Europe, and order wins.
Brokerages largely expect TCS to report revenue growth of around 2.5 percent in dollar terms due to cross-currency tailwinds. Constant currency terms revenue growth is expected to be around 2 percent, sequentially.
