Indian IT stocks face a turbulent day as Accenture revises its revenue forecast downwards, leading to pessimism from analysts.
Indian IT Sector Reacts to Accenture’s Revenue Guidance Cut
The recent downward revision in revenue guidance by Accenture has sent shockwaves through the Indian IT sector, sparking concerns about the pace of revenue recovery.
Market Response: Mid- and Small-Cap Indices Find Some Relief
While mid-and smallcap indices experienced a slight relief, experts caution that the sector may not be out of the woods yet.
Impact on Stock Market: Indian IT Services Stocks Plummet
On March 22, Indian IT services stocks witnessed a significant plunge, reflecting the prevailing pessimism. Accenture’s decision to lower its revenue guidance amid economic uncertainty has prompted clients to scale back spending on consulting services.
Nifty IT Index Takes a Hit
The Nifty IT index plummeted over 3 percent, with all constituents registering substantial declines early in the trading session. Major players like HCL Tech, Mphasis, and Persistent Systems recorded losses exceeding four percent.
Individual Stock Performance: LTIMindtree, Infosys, HCL Tech, and More
LTIMindtree shares hit a two-month low, while Infosys experienced its most substantial drop in eight months. HCL Tech witnessed its sharpest decline in 15 months, with heightened trading volumes across all IT counters. Tech Mahindra also saw its shares dip to an eight-week low.
Accenture’s Revised Projections
Accenture revised its full-year revenue growth projection to 1 percent to 3 percent, down from the initial 2 percent to 5 percent. This adjustment reflects the challenges posed by sluggish demand for IT and consulting services amid prevailing economic uncertainties.
Analysts’ Views and Market Sentiment
Analysts express concerns about the pace of revenue recovery in the Indian IT sector. Morgan Stanley highlights the cautious sentiment following Accenture’s guidance cut, while CLSA warns of a lack of significant growth pickup in the near term.
Nomura’s Pessimistic Stance on Select IT Stocks
Nomura maintains a pessimistic outlook on select IT stocks, including TCS, Wipro, LTIMindtree, L&T Tech, and Mphasis. However, the brokerage remains bullish on Tech Mahindra, Coforge, Birlasoft, and eClerx.
Contrary Opinion from Nuvama Institutional Equities
In contrast, Nuvama Institutional Equities downplays the impact of Accenture’s guidance cut on Indian IT firms, suggesting minimal downgrade risk. The brokerage maintains a positive outlook on the sector, anticipating robust earnings growth over the next few years.
As the Indian IT sector grapples with uncertainties, market participants closely monitor developments and adjust their strategies accordingly.
The information provided in this article is based on current market trends and expert analysis as of March 22, 2024.
