Top IT Picks: Emkay Global lists out bets amidst weak hiring trends

The Nifty IT index has gained 3.3% and outperformed broader markets by 1.7% in the past one month on the back of expectations of easing tariffs. However, the Nifty IT index corrected by 0.7% and 14.9% in the past thee month and six month and underperformed the broader market by 12.4% and 16.7%, respectively.

Among large-cap IT stocks, brokerage firm Emkay Global's top picks, in order of preference, include Infosys, Tata Consultancy Services, Tech Mahindra, LTIMindtree, HCL Technologies, and Wipro.

Emkay, in its latest note on the IT sector, said that lateral hiring in IT services is expected to remain subdued and need-based in the near future. A pickup in IT hiring will likely depend on a sustained recovery in global tech demand, more stable macroeconomic conditions, and a revival in discretionary tech spending, none of which are clearly visible at the moment.

Weak discretionary spending is likely to weigh on revenue growth in the first quarter of the financial year 2026, the brokerage said.

Meanwhile, deal wins are being driven largely by vendor consolidation and cost takeout programs. The probability of a US slowdown in the second half of this Calendar Year remains an overhang, potentially impacting client decision-making, and could stall both revenue recovery and hiring momentum.

The brokerage mentioned that headcount additions in Q4FY25 results showed a mixed and measured trend, as companies focused on increasing utilisation, controlling costs, and boosting productivity.

FY25 marked a recovery phase for IT hiring after a sharp contraction in FY24, although it is still measured.

Management commentary across large-cap IT firms underscores a continued prioritisation of fresher hiring as a strategic lever to optimise the talent pyramid and cost structure.

In FY26, TCS, Infosys, and Wipro have announced plans to onboard over 40,000, 20,000, and 10,000-12,000 freshers, respectively.

Further, Emkay said that there has been no material improvement or deterioration in the demand environment in recent months. FY26 is expected to start on a subdued note, as clients continue to be cautious with tech budgets, especially for discretionary projects.

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