Indian IT stocks suffered a sharp selloff on Friday after Accenture's cautious outlook reignited concerns that global technology spending remains fragile, even as investor enthusiasm around artificial intelligence runs high. The Nifty IT index plunged as much as 5.8%, making it one of the worst-performing sector gauges in Mumbai, as traders reassessed growth prospects for major exporters.
Accenture, a global bellwether for IT services, lowered the upper end of its annual revenue growth forecast and issued a softer-than-expected sales outlook for the current quarter. The company now expects full-year revenue growth of 3% to 4% in local currency, down from its prior guidance of 3% to 5%. It also forecast fourth-quarter revenue between $17.75 billion and $18.4 billion, below Wall Street estimates. Third-quarter revenue rose 6% to $18.72 billion but still missed market expectations, while new bookings fell about 2% to $19.3 billion, signaling slower client decision-making on large transformation contracts.
The warning hit large Indian IT exporters hard, as investors treated the update as an early signal for demand across the broader outsourcing and consulting industry. Shares of Tata Consultancy Services (TCS), Infosys, and HCLTech fell between 5% and 7%. Infosys dropped as much as 8%, TCS lost 5.4%, Wipro declined over 4%, and HCLTech and Tech Mahindra each fell more than 5%. The selloff also weighed on the broader market, with the Nifty 50 and Sensex opening lower after a recent rally, indicating the move was more than a sector-specific correction.
Accenture competes directly with Indian IT firms for digital transformation, cloud migration, consulting, and managed-services contracts. When the global bellwether sounds cautious, investors tend to reassess growth assumptions for Indian exporters. Goldman Sachs analysts noted that Accenture's results signaled a weak read-through for Indian IT companies, as demand visibility remains limited across key client markets.
The bigger question is whether AI spending can offset weakness in traditional IT services. Accenture said demand remains concentrated in areas such as AI, cloud, data, and cybersecurity, and announced deals worth $4.18 billion to expand its industrial cybersecurity business. However, analysts pointed out that Accenture's results suggest demand is becoming more concentrated in targeted AI investments, while broader consulting and transformation spending remains under pressure. That distinction matters for Indian IT firms: AI-led deals may support long-term demand, but they are not yet broad enough to fully replace delayed discretionary projects.
For now, investors are likely to demand clearer signs of deal conversion, revenue visibility, and margin stability before paying higher multiples for the sector again. The rout underscores the market's sensitivity to any sign that global discretionary spending is not recovering fast enough, even as AI-related investments continue to generate headlines. For more on AI-driven demand trends, see our coverage of AI-Driven Power Demand Fuels Nuclear Stocks and Micron Earnings to Gauge AI Chip Demand.
This article is for informational purposes only and does not constitute financial advice.
