A cautious outlook from Accenture has spurred selling in India’s IT sector, with many mid-cap stocks plunging over 55%. Tata Consultancy Services has dropped nearly 55% from its peak, while Wipro, LTIMindtree, and Infosys have also seen significant declines. Happiest Minds leads the mid-cap losers, down about 78% from its all-time high.
Accenture’s subdued guidance for Indian IT stocks has raised concerns about medium-term growth, with brokerages warning of demand uncertainty and geopolitical disruptions. The firm’s lowered revenue forecast for the current quarter disappointed investors despite sector profitability. Morgan Stanley highlighted ongoing uncertainty that could impact FY27 guidance for Indian IT companies.
Geopolitical disruptions, rather than concerns about AI-led productivity gains, have been cited as the main drivers of weakness in the sector. While Indian IT firms face a lack of immediate catalysts, valuations are nearing trough levels. Higher US interest rates pose a challenge to IT stocks by increasing recession risks, potentially leading overseas clients to cut tech spending.
Analysts observed that fourth-quarter earnings and FY27 outlooks from top-tier Indian IT firms fell short of expectations. The IT sector in India, valued at approximately Rs 26 lakh crore, heavily relies on the US market for around 57% of its revenue.
