Accenture impact: Nifty IT index cracks 6%; TCS, Infy, TechM plunge up to 8%

Indian IT stocks fell on Friday as Accenture narrowed its annual revenue growth forecast and issued weaker-than-expected fourth-quarter guidance, despite steady quarterly earnings.

IT shares today

Shares of information technology (IT) companies were under pressure, falling up to 8 per cent on the National Stock Exchange (NSE) in Friday’s intra-day deals. The fall came after Accenture narrowed its annual revenue growth forecast and issued weaker-than-expected fourth-quarter guidance, despite steady quarterly earnings. Accenture shares fell over 14 per cent on Thursday.

 

Share price of Infosys and Mphasis tanked 8 per cent each, while Tata Consultancy Services (TCS), Tech Mahindra and Persistent Systems plunged 7 per cent each. HCL Technologies, LTM and Coforge were down 6 per cent each. 

 

The Nifty IT index tumbled 6.4 per cent on the NSE in intra-day deals to 26,634.50. The IT index was quoting at its lowest level since April 21, 2023.

 

 

At 09:23 AM on Friday, the Nifty IT index was the top loser among sectoral indices, down 5.7 per cent, as compared to 0.82 per cent decline in the Nifty 50. In the past five months, Nifty IT index underperformed the market by plunging 32 per cent, as compared to 6.3 per cent decline in the Nifty 50. 

Accenture’s Q3 commentary 

 

Accenture has guided for 1-5 per cent growth in constant currency (CC) terms for 4QFY26E, and expects 0.5 per cent headwind from currency movements in 4QFY26E.  The company has lowered its FY26E guidance band for revenue growth from 3-5 per cent to 3-4 per cent y-y in CC terms largely due to the West Asia conflict and two large deals slipping into FY27E (due to client-specific issues). 

 

For FY26E, Accenture expects around +2 per cent tailwind from currency movements and 1 per cent headwind from its US business. FY26E adjusted EBIT margin guidance came in at 15.8 per cent versus previous the guidance band of 15.7-15.9 per cent.

  The Q3 commentary suggests the demand environment remains mixed, with strong AI-led transformation demand offset by weak discretionary spending and elongated decision cycles. For FY26, management expects consulting growth in low single digits and managed services growth in mid-single digits.   Revenue miss  There was a direct impact of around $100 million revenue miss in Q3-FY26 from the West Asia business (all consulting-type work). The Automotive vertical which was already a challenged sector, Accenture said, saw added pressure due to higher oil/gas prices.

 

However, the company highlighted growing momentum in AI (100 new advanced AI projects added), cyber security and platform-led offerings, while acquisitions such as Dargos, runZero and NetRise expand its exposure to a $27 billion fast-growing market of cyber security OT. 

Brokerages view on IT sector, stocks

 

For Indian IT services, the read-through remains largely unchanged - AI-led demand and large deal activity are supporting growth, but the broader recovery is still gradual rather than broad-based.   Analysts at Nomura believe that the West Asia conflict is expected to have some effect on the revenues and deal bookings in Q1-FY27 for the Indian IT majors.  "In our view, the indirect impacts can continue in Q2-FY27 as it is not clear how quickly spending behaviour will normalise, particularly in challenged sectors like auto. We prefer Infosys (Buy) and Cognizant (Buy) in large-caps; Coforge (Buy) in mid-caps and eClerx (Buy) in the small-cap IT segment," wrote Abhishek Bhandari and Karan Nain of Nomura in a recent note. 

Overall, Accenture's commentary, according to analysts at Choice Institutional Equities, suggests that AI is becoming an increasingly meaningful demand driver; however, it remains insufficient to offset near-term weakness from discretionary spending pressures, elongated deal cycles and delayed large-program conversions.  The brokerage firm expects a gradual recovery trajectory for Indian IT rather than a broad-based acceleration in FY27. Within Tier-1, their analysts prefer Infosys and Tech Mahindra. Among mid-caps, Persistent Systems and Coforge are their preferred ideas.  "We remain watchful regarding the discretionary spend outlook in CY26E/FY27E. Accenture's 4QFY26E growth guidance implies that macro-led demand issues for the Indian IT sector may continue in H1-FY27 (April 2026-September 2026) and its major adverse impact, if any, on the growth estimates for FY27," wrote analysts at Equirus Securities.

 

Adding: "We continue to recommend selecting stocks which has decent growth visibility through well-balanced portfolio on the cost take out and discretionary/AI led transformational spend.  We prefer Infosys and TechM amongst large-caps and Mphasis, eClerx and KPIT Tech amongst the midcaps on a relative basis."

   

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