New Delhi, Oct. 2 -- Tier-2 IT companies are expected to outperform larger industry players in the second quarter of FY27, even as the sector faces challenges from geopolitical tensions, weak macroeconomic conditions and the growing impact of generative artificial intelligence (Gen-AI), according to a report by Nuvama.

The report said the overall demand environment remained largely stable during the quarter, but weakened in September amid rising geopolitical uncertainties.

"The demand environment has largely remained stable with some weakness in Sep-26 due to a worsening geopolitical environment," the report said.

Nuvama expects management commentary during the earnings season to highlight challenges arising from geopolitics, a weak ma...