Tech stocks stages a comeback after a sharp kneejerk reaction in early trade. The Nifty IT Index is currently trading in the green and key Index stocks like Infosys, TCS, Wipro are off intra-day lows. Though Accenture narrowing down the guidance and stating that clients, especially in the public sector, are reviewing and cutting government-related IT spending in US is a worry for the sector, the impact for Indian tech companies may be limited.
Accenture’s results are often viewed as a barometer for the broader IT sector, setting the stage for what is to come. With the Indian IT earnings season kicking off in April, this will be keenly watched whether domestic firm navigate these same headwinds. Accenture raised the lower end of its forecast to 5-7% from the earlier 4-7%. Although, this indicates a steady demand for IT services, it also in a way indicates persistent challenges in the macroeconomics landscape.
Nifty IT recovers from early losses
After opening nearly 2% lower, the Nifty IT index staged a intraday recovery, inching up 0.2% into the green.Among the top gainers, MphasiS jumped 3.5%, followed by Coforge at 2%. Other IT heavyweights like Persistent Systems, HCL Tech, Larsen & Toubro, Tech Mahindra, TCS, and LTIMindtree also showed positive momentum. Out of the 10 IT stocks, only Infosys and Wipro remain in the red, slipping 1.5% and 0.6%, respectively.
The index has rebounded 3% from its intraday low.
Accenture Guidance: How this affects Indian IT stocks
Unlike Accenture, Indian IT giants do not have direct exposure to US federal government contracts. However, rising macroeconomic uncertainty may still impact client spending, particularly in banking, capital markets, and other key sectors.
Indian IT companies have been banking on the artificial intelligence (AI) boom, but the pace of AI-driven transformation remains gradual. Accenture reported that its generative AI (GenAI) bookings touched $2.6 billion in the first half of FY25, nearly reaching last year’s total of $3 billion.
What are brokerages expecting on tech stocks?
Nuvama of IT stocks
According to the brokerage firm Nuvama, “Accenture upgraded the lower end of its FY25 revenue growth guidance to 5–7% from 4–7% YoY (CC), with an inorganic contribution of slightly more than 3%. Management alluded to an elevated level of uncertainty over the past few weeks, especially in public services, due to review and cuts of government spending.”
The brokerage also noted that Accenture’s headcount increased by about 2,000 employees, with its data and AI workforce now at 72,000, approaching its FY25 target of 80,000. In addition to this, the firm has already invested over $500 million across 11 acquisitions in the first half of FY25, with a full-year target of $2-3 billion in investments.
Nomura on Indian IT stocks
Another brokerage firm, Nomura, offering a perspective on Indian IT stocks, stated, “Unlike Accenture, Indian IT companies do not have any exposure to U.S. federal government contracts. However, the risk of clients turning cautious on IT spending due to rising macro uncertainty could increase in the near term.”
The brokerage also pointed out that while discretionary demand recovery might take a few quarters, the situation is unlikely to worsen drastically unless there is a severe macroeconomic downturn. It prefers Infosys (INFO) and Cognizant (CTSH) in the large-cap segment and Coforge in mid-caps.