Synopsis : Indian IT stocks witnessed heavy selling pressure after Accenture lowered its revenue growth guidance for the second time this year. The move triggered concerns about global technology spending, dragging the Nifty IT Index down nearly 6%, with Infosys, TCS, Tech Mahindra and other major IT companies witnessing sharp declines.
Indian technology stocks came under significant pressure on June 19 after global consulting giant Accenture lowered its full-year revenue growth guidance, sparking concerns about the outlook for technology spending worldwide.
The Nifty IT Index emerged as the worst-performing sectoral index during the session, declining nearly 6%. Among the frontline losers, Infosys plunged around 8%, while shares of TCS, Tech Mahindra, HCL Technologies, Mphasis and LTIMindtree also witnessed steep declines.
The selloff followed Accenture’s decision to cut its fiscal-year revenue growth outlook for the second time this year. The company now expects revenue growth of 3-4% in local currency terms, compared with its earlier guidance of 3-5%.
Why Accenture matters for Indian IT stocks
Accenture is widely regarded as a bellwether for the global IT services industry. Its earnings performance, deal pipeline and management commentary often provide an early indication of enterprise technology spending trends across key markets such as the United States and Europe.
A weaker outlook from Accenture typically raises concerns about demand conditions for Indian IT companies, many of which derive a significant portion of their revenue from global clients.
According to brokerage firm Jefferies, Accenture’s revised guidance suggests further moderation in growth, which could lead to earnings estimate cuts for Indian IT companies and increase concerns around long-term growth prospects.
Jefferies sees risks for the sector
Jefferies highlighted three key concerns for Indian IT companies following Accenture’s guidance cut.
First, slower growth at Accenture could result in further reductions to consensus earnings estimates for Indian IT firms.
Second, the brokerage believes persistent growth challenges could weigh on valuation multiples across the sector.
Third, companies may increasingly need to rely on alternative growth drivers such as acquisitions, mid-market opportunities and new technology segments to compensate for weakness in traditional IT services demand.
Jefferies also noted that uncertainty surrounding artificial intelligence, changing client spending priorities and a volatile macroeconomic environment continue to pose challenges for the sector.
Nuvama remains positive on the long-term story
While acknowledging the near-term impact of Accenture’s guidance revision, Nuvama Institutional Equities believes the long-term outlook for Indian IT companies remains constructive.
The brokerage said generative AI could eventually expand the total addressable market for IT services companies by creating new business opportunities and accelerating digital transformation initiatives.
Nuvama also pointed out that the recent correction has made valuations across the sector significantly more attractive than before.
Accenture focuses on AI and acquisitions
Despite lowering its revenue outlook, Accenture reported healthy profitability and reiterated its focus on artificial intelligence and large-scale transformation projects.
The company also increased its acquisition spending target to $9 billion from $5 billion earlier, reflecting its strategy of expanding into newer technology segments and strengthening capabilities through acquisitions.
Management highlighted continued demand for AI-led transformation programmes and large enterprise deals, suggesting that long-term technology spending trends remain intact despite short-term challenges.
What investors should watch next
The focus will now shift to upcoming quarterly results and management commentary from Indian IT companies.
Investors will closely monitor:
- Revenue growth outlook for FY27
- Demand trends in key international markets
- AI-related deal wins and project pipelines
- Margin performance amid slower growth
- Client technology spending patterns
While today's selloff reflects near-term concerns, the sector's longer-term trajectory will depend on how effectively companies capitalise on emerging opportunities in artificial intelligence, cloud computing and digital transformation.
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