Domestic IT stocks witnessed a sharp sell-off on Friday after Accenture cut its FY26 revenue growth guidance and flagged a challenging demand environment, raising concerns over the near-term outlook for technology spending globally.

The Nifty IT index plunged more than 6 per cent to a fresh 52-week low of 26,634.50, making it the worst-performing sectoral index. The decline followed Accenture’s weaker-than-expected quarterly results and reduced full-year revenue growth guidance of 3-4 per cent, compared with 3-5 per cent earlier.

The weakness was broad-based, with all major IT stocks trading in the red.

Infosys tumbled 8.6 per cent to a 52-week low of ₹1,030, while Tata Consultancy Services (TCS) declined 6.5 per cent to ₹2,059.90. Wipro fell 4.3 per cent to a 52-week low of ₹174.89.

HCLTech, Tech Mahindra, LTIMindtree, Persistent Systems, Mphasis and Coforge also declined up to 5 per cent.

Accenture outlook sparks concerns on IT spending

Investor sentiment turned negative after Accenture lowered its FY26 constant-currency revenue growth guidance to 3-4 per cent from 3-5 per cent earlier. The company also reduced its commercial business growth outlook to 4-5 per cent from 4-6 per cent.

The earnings disappointment triggered a sharp reaction globally. Accenture shares plunged 18 per cent in the US overnight, marking their steepest single-day decline on record. Cognizant fell 11 per cent, while Capgemini declined nearly 9 per cent. Infosys ADRs dropped nearly 10 per cent and Wipro ADRs fell 3.6 per cent.

Shashwat Singh, Fundamental Analyst at Bajaj Broking, said the sell-off in Indian IT stocks was a direct reaction to Accenture’s guidance cut.

“Accenture has indicated that clients remain cautious on discretionary technology spending. Since Indian IT companies depend on the same global pipeline for technology projects, the guidance revision acts as a warning signal for the sector and has triggered investor selling,” Singh said.

Brokerages flag risks to growth outlook

Morgan Stanley said Accenture’s results pointed to a difficult macroeconomic environment that could extend into the next quarter. The brokerage noted that management commentary highlighted delayed decision-making by clients and the impact of geopolitical tensions, particularly in theWest Asia.

According to Morgan Stanley, the indirect impact of geopolitical uncertainty is being felt across geographies and industry verticals, increasing the risk of weaker FY27 guidance from Indian IT companies. The brokerage also said the impact could vary across companies depending on their exposure to affected sectors and regions.

Demand environment remains weak

HSBC said Accenture’s guidance cut signals a continued soft demand environment and is a negative read-through for Indian IT companies. However, the brokerage noted that the weakness appears to be driven more by disruptions in West Asia than by AI-related productivity pressures. HSBC added that Indian IT services firms currently lack near-term growth triggers, although valuations are approaching trough levels.

Jefferies said Accenture’s revised revenue growth guidance suggests further moderation in growth and could lead to cuts in consensus earnings estimates. The brokerage warned that weak growth despite a favourable base may raise concerns about the sector’s long-term growth outlook and could result in further valuation derating.

Jefferies also noted that after Accenture’s sharp correction, the top five Indian IT companies continue to trade at a significant premium to the global consulting giant, creating additional downside risk to sector valuations.

Kotak Securities said Accenture’s earnings offered “no solace” for an industry already facing multiple challenges. The brokerage highlighted risks from increasing generative AI capabilities, potential pressure on discretionary spending and the impact of ongoing geopolitical tensions. It added that Infosys could be relatively more vulnerable than some large-cap peers to the indirect effects of slower spending.

Choice Institutional Equities flagged the key takeaway is that AI demand continues to build-up and remains additive to technology spending; however, the pace of monetisation remains insufficient to offset near-term weakness from discretionary spending pressures and delayed large-deal closures.

Weak bookings add to pressure

Motilal Oswal said Accenture’s results reinforce concerns around weak demand, muted discretionary spending and slowing outsourcing activity.

The brokerage highlighted that Accenture’s outsourcing bookings declined 14.7 per cent y-o-y and noted management’s comments regarding the impact of the Middle East conflict on revenue and client decision-making in Europe.

Motilal Oswal expects Q1FY27 performance for most Indian IT large-cap companies to remain soft, with limited catalysts for revenue acceleration. The brokerage added that while AI implementation opportunities are emerging, the benefits may not accrue entirely to traditional IT service providers, potentially leading to a transition period for existing business models.

With concerns around discretionary spending, geopolitical uncertainty and a lack of near-term growth triggers, analysts expect sentiment towards the IT sector to remain cautious in the near term.

Published on June 19, 2026