- Accenture’s reduced outlook signals continued global tech spending pressure.
Indian technology stocks came under intense selling pressure on Friday, with the Nifty IT Index tumbling nearly 6% as investors reacted to a fresh downgrade in growth expectations from global consulting giant Accenture.
The sharp decline dragged down some of the country’s largest software exporters. Infosys, Tata Consultancy Services (TCS), Tech Mahindra, HCL Technologies, Mphasis and LTIMindtree were among the worst-hit stocks in early trade. Several counters fell between 6% and 8%, reflecting mounting concerns over the outlook for global technology spending.
According to a report by the Financial Express, the selloff was amplified by weakness in the American Depository Receipts (ADRs) of Indian technology companies overnight. Market participants viewed Accenture’s latest guidance revision as a warning sign for demand conditions across the broader IT services industry.
Accenture Cuts Guidance Again
Accenture reported mixed third-quarter results and lowered its revenue growth expectations for the fiscal year, marking the second adjustment to its outlook this year.
The company now expects revenue growth of 3% to 4% in local currency terms, compared with its March forecast of 3% to 5%. Accenture follows a September-to-August financial year.
Chief Executive Officer Julie Sweet said the company delivered broad-based revenue growth, a 9% increase in earnings per share and returned $8.2 billion to shareholders year-to-date. She also highlighted strong demand for large-scale transformation projects and a growing pipeline of AI-related programmes.
Sweet added that Accenture’s acquisitions of interests in cybersecurity-focused firms Dragos, runZero and NetRise are aimed at expanding its addressable market and strengthening its position in critical operational technology security services.
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Why Accenture Matters For Indian IT Stocks
Accenture’s financial performance and outlook are closely monitored by investors in Indian technology companies because the consulting firm’s business is often viewed as a barometer of global technology spending trends.
A reduction in Accenture’s revenue growth guidance suggests that enterprise technology spending may remain under pressure in the near term. That has direct implications for Indian IT firms, many of which depend heavily on overseas clients for growth.
According to Jefferies, the revised forecast points to continued moderation in demand and could trigger further cuts to consensus earnings estimates for Indian IT companies. The brokerage also warned that slower growth may raise questions about the sector’s longer-term earnings trajectory and valuation multiples.
Nifty IT Emerges As Biggest Loser
The Nifty IT Index was the weakest-performing sectoral index during the session, declining 5.85%. Infosys led the losses, dropping 8%, while Mphasis, TCS, Tech Mahindra, HCL Technologies and LTIMindtree also posted steep declines.
All 10 constituents of the Nifty IT Index traded lower at the open. TCS, Infosys, HCLTech and Wipro fell between 3.3% and 6% during early trading hours.
The weakness was not limited to India. Asian technology peers, including NEC Corp. and BayCurrent Inc., also declined. TCS fell to its lowest level since 2020, while Infosys tracked a sharp overnight decline in its US-listed shares.
What Jefferies Is Watching Closely
Jefferies outlined three key concerns for the Indian IT sector following Accenture’s guidance cut.
First, the brokerage believes additional downgrades to growth expectations remain possible. The revised outlook from Accenture suggests further moderation in demand, which could force analysts to lower earnings projections for Indian IT companies.
Second, Jefferies warned that sluggish growth, even against a relatively low base, may intensify concerns about the sector’s long-term prospects. This could result in further pressure on valuation multiples.
Third, the brokerage said technology firms may need to identify alternative growth engines. Areas such as the mid-market segment and mergers and acquisitions could become increasingly important as traditional services growth remains soft.
Jefferies also highlighted valuation concerns. Following Accenture’s 18% decline, the top five Indian IT companies are still trading at a roughly 70% premium to the global consulting firm. According to the brokerage, this leaves room for further downside risks to sector valuations.
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Nuvama Sees Near-Term Pressure But AI Opportunity
Nuvama Institutional Equities described Accenture’s guidance reduction as slightly negative for Indian IT companies, as per Financial Express.
The brokerage noted that weaker bookings and the impact of the Middle East conflict contributed to the softer outlook, creating additional uncertainty for the sector.
However, Nuvama maintained a more constructive long-term view. The brokerage said generative AI is expected to expand the total addressable market for Indian technology firms over time.
Nuvama also argued that the recent correction has made sector valuations significantly more attractive, even as near-term challenges persist.
JP Morgan Highlights Shift In Growth Strategy
J.P. Morgan retained its “Overweight” rating on Accenture after the company’s third-quarter earnings announcement.
The brokerage described the results as mixed, pointing to revenue that landed only at the midpoint of guidance rather than exceeding expectations. However, adjusted earnings per share and operating margins both came in ahead of forecasts.
One of the most notable developments, according to J.P. Morgan, was Accenture’s decision to increase its acquisition spending target to $9 billion from $5 billion. The company is focusing on larger transactions, particularly in areas such as operational technology security.
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What It Means For India’s IT And AI Future
The latest selloff underscores growing investor concerns about the ability of Indian software exporters to navigate a rapidly changing technology landscape.
The NSE Nifty IT Index has now fallen more than 32 per cent from its December peak, wiping out over $100 billion in combined market value. The decline reflects concerns over slowing global demand, valuation pressures and uncertainty surrounding the pace of technology spending.
At the same time, the rise of artificial intelligence is reshaping the industry’s traditional business model. Indian IT companies, long regarded as symbols of the country’s technology success, are facing increasing scrutiny over how effectively they can adapt to AI-driven transformation while maintaining growth and managing large workforces.
For investors, the key question is no longer whether AI will transform the sector. It is whether India’s technology leaders can turn that disruption into their next phase of growth.
