"We remain negative on the sector as we haven't seen a meaningful uptick in demand in our recent checks. We think the overall setup is not as positive as last quarter," analysts Ankur Rudra and Bhavik Mehta said in a note on Wednesday.

All major IT firms, including Infosys, TCS, Wipro and HCLTech, have previously warned that clients, the majority of which are U.S.-based, have been lowering their IT spending, delaying and even cancelling contracts, as economic growth slows and on fears of higher-for-longer interest rates.

"Investors have assumed FY24 is a washout and shifted focus to FY25, hoping for a rebound," the analysts said, adding that explained the Nifty IT index outperforming the blue-chip Nifty 50 over the past three months.

The focus for this quarter's earnings reports will be on deal signings as well as the split of new deals versus renewals to assess fiscal 2025 growth, the analysts said.

However, Rudra and Mehta said their recent meeting with various industry executives recently did not show "any meaningful optimism of a demand rebound".

"There are green shoots in certain paths, but overall decision-making and deal ramp-ups remain sluggish."

They remain more negative on the sector than on the broader market.

J.P.Morgan expects high single-digit earnings growth, in percentage terms, for large-cap IT companies in fiscal 2025, while market expectations are for double-digit growth.

Similarly, it expects low double-digit growth for mid-cap companies, compared with market expectations of mid-teens growth.

Nonetheless, J.P.Morgan upgraded Infosys to "neutral" from "underweight" saying lower expectations were baked in and its large deal wins give visibility into fiscal 2025.

TCS, Infosys and HCLTech report results next week.

(Reporting by Navamya Ganesh Acharya in Bengaluru; Editing by Savio D'Souza and Janane Venkatraman)