Power holds up as IT and auto face stock-specific pressure

The week had a defensive shape. Power was supported by transmission and capacity-expansion news, while IT and auto came under pressure as global macro concerns and company-specific cost or growth questions outweighed constructive operating data.

The common thread was the market’s preference for visible cash flows and order books over longer-dated growth narratives. Higher Brent crude and a firmer domestic bond-yield backdrop added to the pressure on sectors exposed to imported costs, discretionary spending or capital intensity. The rupee ended the week weaker, although its limited daily movement provided some support to exporters such as IT services companies.

Power Grid was the main stock-specific support in the sector. The company was reported to have won a Rs 26,000 crore Barmer high-voltage direct-current transmission order, taking its order book to nearly Rs 2 lakh crore. It also received approval to raise its borrowing limit by Rs 40,000 crore to Rs 2.2 lakh crore. The reported share-price gain reflected the visibility offered by transmission investment, although the higher borrowing requirement makes funding costs and returns on capital relevant to the economics.

NTPC also gained during the week’s trading, while first-quarter commentary kept the broader sector constructive. Axis Securities said electricity demand rose 8% year-on-year to 483 billion units in the first quarter of financial year 2026-27, with peak demand reaching 271 gigawatts in May. Renewable capacity excluding large hydro increased by 13 gigawatts quarter-on-quarter to 242 gigawatts in June 2026. The implication is positive for generators, grid operators and equipment suppliers, but the reported increase in renewable curtailment risk means storage and grid readiness are becoming more important. India is considering low-cost loans for renewable projects affected by power curbs, according to a report citing sources.

The relevant input for power is the cost of capital rather than crude alone. India’s 10-year government bond yield ended the week at 6.85%, after reaching 6.88%, and rose nearly 10 basis points during the week. Higher yields can raise financing costs for transmission, generation and renewable projects. The coming week has no specific scheduled power-sector print or policy decision identified in the supplied material; attention is therefore likely to remain on order announcements, renewable offtake and storage-related developments.

IT shares weakened as brokerages turned more cautious on large-cap names. CLSA downgraded TCS, Infosys and Tech Mahindra to Hold and Wipro and Mphasis to Underperform, citing the long gestation period for AI benefits, limited near-term upside and structural concerns. Kotak Institutional Equities separately cited industry headwinds, client-specific issues and concerns that current deal flow was insufficient to support growth aspirations for all providers. Infosys and HCLTech were among the stocks that dragged the broader market on Friday, while TCS, Tech Mahindra and Wipro were also under pressure during the week.

The operating picture was mixed. Large transformation, vendor-consolidation and AI-led programmes continued to support total contract values, but weaker discretionary spending was squeezing the flow of smaller projects. Reuters reported that TCS, Infosys, Wipro, HCLTech and Cognizant were increasingly exploring outcome-linked pricing as clients demanded lower prices and higher productivity. That matters because AI-led efficiency can support demand while simultaneously putting pressure on billing models and margins. The rupee ended at 95.71 per US dollar and weakened 0.3% over the week. A weaker rupee generally improves the reported rupee value of dollar revenue, but it does not resolve the sector’s central issue: whether US clients will commit discretionary technology budgets and at what price.

The coming week has no specific IT result, scheduled industry print or policy decision identified in the supplied material. The immediate watchpoints are therefore any further company commentary on US discretionary spending, deal sizes and guidance, as well as whether the debate over AI-related pricing pressure broadens beyond broker research.

Auto shares were weighed down by weakness in the large manufacturers. On Friday, Maruti Suzuki, Mahindra & Mahindra, Tata Motors Passenger Vehicles, Bajaj Auto and Eicher Motors all closed lower, with Maruti among the sharper fallers. Tata Motors Passenger Vehicles announced that it would raise prices across its car and SUV portfolio by up to Rs 25,000 from September 1, covering both internal-combustion-engine and electric vehicles. Hyundai Motor India also announced a price increase of up to 1% from September. The companies said the revisions were intended to offset rising input and commodity costs and higher operating expenses.

Demand data was more supportive than the share-price action. Industry registrations rose 16% year-on-year in the first 15 days of August, according to brokerage analysis. Passenger-vehicle registrations rose 4% year-on-year, commercial-vehicle registrations increased 5%, and tractor registrations rose 14%. Electric two-wheeler penetration was 10%, while passenger-vehicle EV penetration was 8%. Tata Motors accounted for 36% of the passenger-vehicle EV market and Mahindra & Mahindra 23%; TVS Motor led electric two-wheelers with a 29% share, followed by Bajaj Auto at 22% and Ather Energy at 17%. These figures point to firm near-term volumes, but price increases create a test for demand elasticity and the ability to recover higher material costs.

For auto, the immediate input concern is commodity inflation. The supplied material does not provide a separate weekly price move for steel, aluminium or other vehicle materials, but manufacturers’ price actions show that input costs and operating expenses are affecting margins. Brent crude ended at $93.82 a barrel and rose more than 7% over the week. Higher crude can raise logistics and fuel costs and affect consumer purchasing power, even though the direct raw-material impact differs across vehicle categories. No specific monthly volume release, result or policy decision is identified as scheduled for the coming week in the supplied material; the market will instead monitor the implementation of the announced September price increases and further EV-registration data when available.

The coming week begins with the same cross-asset tension: crude remains elevated, the rupee is near 96 per dollar and government bond yields are close to recent highs. For power, that combination keeps financing costs and renewable offtake in focus. For IT, the rupee provides a limited translation benefit, but the more important questions are US discretionary spending, deal composition and AI-related pricing. For auto, higher fuel and commodity costs will be weighed against firm registration data and manufacturers’ ability to pass costs through without weakening demand.

No specific sector-wide result, policy decision or expiry for the three covered sectors is identified as scheduled in the supplied material. The next week’s review will therefore depend on fresh company disclosures, order announcements and operating data rather than a single pre-announced catalyst.