Synopsis
The Nifty IT index fell over 6% to a three-year low after Accenture’s lower forecast triggered a sharp sell-off in Infosys, TCS, HCLTech and other IT stocks. While some experts believe valuations are becoming attractive after the correction, others remain cautious about AI-driven disruption and slowing growth prospects.
ETMarkets.comShares of IT majors such as InfosysHCLTech, TCS and others plunged as much as 9% on Friday, leading to the A clever computer index down more than 6% to its lowest level in more than three years as Accenture’s lower forecast shook investor confidence.
The Nifty IT index on Friday plunged to 26,634.50, the lowest level seen by the sectoral index since April 2023. It is currently the top sectoral loser in the market today. Shares of Infosys led the losses, slumping nearly 9%, while those of TCS, PhaseLTI Mindtree, Tech Mahindra, Persistent systems and HCL Tech fell 4-6%.
This follows an 11% collapse in Accenture’s share price on Wall Street after the consulting firm revised its FY26 revenue growth forecast to 3-4% from 3-5% previously. The company also forecast fourth-quarter revenue of between $17.75 billion and $18.4 billion, below Street expectations of $18.47 billion, according to LSEG data.
Accenture’s darker outlook may have reignited concerns that companies remain cautious about discretionary spending on IT consulting and digital transformation projects, even as investments in artificial intelligence and cybersecurity continue. Indian IT companies derive a large portion of their revenue from the US economy. Therefore, concerns over reduction in discretionary spending may have led to a sharp sell-off in stocks on Dalal Street.
Also read: TCS, Infosys, Wipro and other IT stocks slump up to 9% as Accenture lowers FY26 forecastShould You Buy the Dip in IT Stocks?Accenture’s steep selloff overnight is the kind of move that confirms rather than introduces what has been a slowly building structural reality, said Harshal Dasani, chief commercial officer at INVasset PMS. “The 6% decline in the Nifty IT index is the predictable reading. The valuation story is now the most uncomfortable conversation. Indian IT services trading at 16-18 times earnings with single-digit revenue growth expectations is expensive, not cheap,” he added.
The honest picture is that traditional IT services increasingly looks like a declining business in its current form, according to Dasani. “The stance on Indian IT remains firmly cautious. Selective interest remains reserved for credible AI-native and hyperscaler-aligned companies; the sector as a whole deserves significantly lower multiple expectations,” he added.
VK Vijayakumar, chief investment strategist at Geojit Investments, however, has a different view, saying buying in IT stocks may emerge at lower levels as valuations become attractive after the sharp correction.
Also read: Why Accenture’s warning triggered a Rs 1.35 lakh crore collapse for TCS, Infosys and other IT stocks
Key Technical Levels to Watch for Nifty ITThe Nifty IT index plunged over 6%, falling below its previous low of 27,078 recorded on May 14. Technically, the index is trading below its key short- and long-term moving averages, said Sudeep Shah, head of technical and derivatives research at SBI Securities.
He highlighted that the RSI of the index fell below 40, signaling increasing bearish momentum, while the DI- exceeded DI+ on the ADX indicator, highlighting the strong dominance of sellers. The 27,450-27,500 area is expected to provide key resistance and the trend is likely to remain bearish as long as the index remains below this area, according to the analyst.
Also read: Why is the market falling today?
(With contribution from agencies)(Disclaimer: The recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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