IT stocks faced selling pressure as the Nifty IT index dropped over 6% following Accenture’s reduced revenue growth forecast and concerns about weaker demand in the global technology sector. The technology index hit an intraday low of 26,634.50, marking it as the worst-performing sectoral index in early trade.
Infosys led the sell-off with a 7.4% decline, while Tata Consultancy Services (TCS) and Mphasis fell 5.6% and 5.3% respectively. Other major IT companies like Persistent Systems, LTIMindtree, Tech Mahindra, and HCLTech also saw declines ranging from 4% to 4.5%.
The broader market also witnessed selling pressure, with technology stocks on the BSE Midcap index such as KPIT Technologies, Tata Elxsi, Hexaware Technologies, and LT Technology Services among the top losers, trading significantly lower.
The sell-off was triggered by Accenture’s guidance cuts, leading to a decline in Indian IT majors’ ADRs. Market experts suggest that buying interest may emerge at lower levels due to attractive valuations in the IT sector, but caution remains as pressure on IT stocks could persist if earnings continue to fall short of market expectations.
Despite the correction, valuations of major Indian IT companies remain higher than Accenture’s, which is currently trading at around nine times one-year forward consensus earnings. Analysts advise caution given the prevailing uncertainty in the sector.
