TCS, Wipro, Infosys, Other IT Stocks Fall As Accenture Guidance Signals Tough Times Ahead

The Indian IT sector is facing a challenging day on Friday, with all major stocks trading in the red as Accenture's guidance after the results turned investor sentiment negative. The sector, which has been in a correction zone since its peak in December, saw significant declines across the board.

Among the notable losers, L&T Technology Services experienced the steepest drop, falling by 3.83% to Rs 4,476.25 apiece. LTIMindtree also saw a substantial decline of 3.65%, trading at Rs 4,259.8 apiece.

Persistent Systems and Infosys witnessed a decline of 3.19% and 3.21%, respectively. Other major IT stocks such as Wipro, Mphasis, and Coforge also recorded losses, with Wipro down by 2.91% to Rs 260.2 apiece, Mphasis fell by 2.84% to Rs 2,240.4 apiece, and Coforge by 2.75% to Rs 7,370.1 apiece.

Accenture's earnings report signaled tough times ahead for the IT sector. The company increased its lower-end forecast for earnings per share (EPS) and revenue for fiscal 2025, but the outlook remains cautious.

Accenture now expects its EPS to be in the range of $12.55 to $12.79 per share, slightly up from its previous expectations. Revenue is anticipated to rise by 5-7%, compared to the earlier forecast of 4-7%. Despite these adjustments, the company's operating margin forecast has tightened, and its generative AI-related new bookings for the second quarter stood at $1.4 billion.

Brokerages have turned mixed on the sector, with some flagging potential trouble ahead. CLSA remains optimistic based on stable pricing and budgets, while HSBC and Citi have adopted a more cautious stance. HSBC highlighted a possible pause in flow business, particularly in retail, and noted that it will be difficult for the IT sector to outperform the market in 2025. Citi echoed these concerns, citing heightened uncertainty in the global economy and geopolitics.

Nomura also expressed caution, noting that while Indian IT companies do not have exposure to US federal government contracts, the risk of clients turning cautious on IT spending due to rising macroeconomic uncertainty could increase in the near term. The brokerage believes that growth for Indian IT companies is likely to bottom out in the financial year 2025.