Domestic IT stocks witnessed a sharp sell-off on Friday after Accenture cut its FY26 revenue growth guidance and flagged a challenging demand environment, raising concerns over the near-term outlook for technology spending globally.
plunged more than 6 per cent to a fresh 52-week low of 26,634.50, before settling at 27,426.85 (down 3.65 per cent), making it the worst-performing sectoral index. The decline followed Accenture’s weaker-than-expected quarterly results and reduced full-year revenue growth guidance of 3-4 per cent, compared with 3-5 per cent earlier.
was broad-based, with all major IT stocks trading in the red, only except OFSS.
Infosys tumbled 7 per cent to end at ₹1,051.40 after hitting a 52-week low of ₹1,030, while (TCS) declined 3.55 per cent to ₹2,125 after hitting a 52-week low of ₹2,059.90. Wipro fell 4.3 per cent to a 52-week low of ₹174.89 before settling at ₹180.80.
, , LTM, Persistent Systems, Mphasis and Coforge also declined 1-4 per cent.
Accenture outlook sparks concerns on IT spending
Investor sentiment turned negative after Accenture lowered its FY26 constant-currency revenue growth guidance to 3-4 per cent from 3-5 per cent earlier. The company also reduced its commercial business growth outlook to 4-5 per cent from 4-6 per cent.
The earnings disappointment triggered a sharp reaction globally. Accenture shares plunged 18 per cent in the US overnight, marking their steepest single-day decline on record. Cognizant fell 11 per cent, while Capgemini declined nearly 9 per cent. Infosys ADRs dropped nearly 10 per cent and Wipro ADRs fell 3.6 per cent.
Shashwat Singh, Fundamental Analyst at Bajaj Broking, said the sell-off in Indian IT stocks was a direct reaction to Accenture’s guidance cut.
“Accenture has indicated that clients remain cautious on discretionary technology spending. Since Indian IT companies depend on the same global pipeline for technology projects, the guidance revision acts as a warning signal for the sector and has triggered investor selling,” Singh said.
Brokerages flag risks to growth outlook
Morgan Stanley said Accenture’s results pointed to a difficult macroeconomic environment that could extend into the next quarter. The brokerage noted that management commentary highlighted delayed decision-making by clients and the impact of geopolitical tensions, particularly in West Asia.
According to Morgan Stanley, the indirect impact of geopolitical uncertainty is being felt across geographies and industry verticals, increasing the risk of weaker FY27 guidance from Indian IT companies. The brokerage also said the impact could vary across companies depending on their exposure to affected sectors and regions.
Nomura expects the impact of West Asia-related uncertainty to spill over into Q1FY27 and possibly Q2FY27, as clients remain cautious on technology spending.
CLSA attributed the softer outlook to macroeconomic challenges rather than disruption, noting that companies dependent on discretionary spending, such as Infosys and Wipro, could face greater pressure.
Demand environment remains weak
Citi said Accenture’s guidance cut reinforces a cautious outlook for Indian IT, with demand trends in key markets remaining weak.
HSBC said Accenture’s guidance cut signals a continued soft demand environment and is a negative read-through for Indian IT companies. However, the brokerage noted that the weakness appears to be driven more by disruptions in West Asia than by AI-related productivity pressures. HSBC added that Indian IT services firms currently lack near-term growth triggers, although valuations are approaching trough levels.
Jefferies said Accenture’s revised revenue growth guidance suggests further moderation in growth and could lead to cuts in consensus earnings estimates. The brokerage warned that weak growth despite a favourable base may raise concerns about the sector’s long-term growth outlook and could result in further valuation derating.
Jefferies also noted that after Accenture’s sharp correction, the top five Indian IT companies continue to trade at a significant premium to the global consulting giant, creating additional downside risk to sector valuations.
Kotak Securities said Accenture’s earnings offered “no solace” for an industry already facing multiple challenges. The brokerage highlighted risks from increasing generative AI capabilities, potential pressure on discretionary spending and the impact of ongoing geopolitical tensions. It added that Infosys could be relatively more vulnerable than some large-cap peers to the indirect effects of slower spending.
Choice Institutional Equities flagged the key takeaway is that AI demand continues to build-up and remains additive to technology spending; however, the pace of monetisation remains insufficient to offset near-term weakness from discretionary spending pressures and delayed large-deal closures.
Nishchal Jain, Quant Researcher at Share.Market by PhonePe, noted that while enterprises continue to invest in generative AI, the pace of monetisation remains slow, raising concerns that AI-led efficiencies could disrupt traditional headcount-based business models.
Weak bookings add to pressure
Motilal Oswal said Accenture’s results reinforce concerns around weak demand, muted discretionary spending and slowing outsourcing activity.
The brokerage highlighted that Accenture’s outsourcing bookings declined 14.7 per cent y-o-y and noted management’s comments regarding the impact of the Middle East conflict on revenue and client decision-making in Europe.
Motilal Oswal expects Q1FY27 performance for most Indian IT large-cap companies to remain soft, with limited catalysts for revenue acceleration. The brokerage added that while AI implementation opportunities are emerging, the benefits may not accrue entirely to traditional IT service providers, potentially leading to a transition period for existing business models.
With concerns around discretionary spending, geopolitical uncertainty and a lack of near-term growth triggers, analysts expect sentiment towards the IT sector to remain cautious in the near term.
Despite the near-term uncertainty, Nomura said it prefers Infosys and Cognizant among large-cap IT firms, Coforge in the mid-cap space and eClerx among small-caps.
From a strategy perspective, Nishchal Jain said the sell-off is a valuation reset for the sector. He recommended a staggered accumulation approach over the next three to six months, focusing on large-cap IT companies with the financial strength to benefit from the transition towards an AI-led technology landscape.