There may be a declining trend in the shares of Indian IT companies in the coming times. Accenture’s management commentary and guidance cuts reflect continued softness in near-term demand as clients remain cautious about spending decisions amid widespread uncertainties. Emkay Global Financial Services said the Nifty IT index has declined 5.5 per cent in the last one month. Broader markets fell 4.6 per cent due to weak guidance given by some global service partners for calendar year 2024.
Importance of Accenture’s Performance
Deepak Jasani, head of retail research at HDFC Securities, said Accenture’s performance is widely considered a benchmark for the Indian IT industry, providing a glimpse of expected results for Indian IT companies. Indian IT stocks are likely to fall given the weak revenue outlook of Accenture Plc.
Read-through negative for rest of IT services sector
Kotak Institutional Equities said in a note that the Accenture guidance cut reflects a decline in discretionary spending and further cuts in short-cycle programs. The read-through is negative for the rest of the IT services sector and suggests weaker than expected spending. According to IANS news, Kotak Institutional Equities said that we expect large IT services companies to start FY2025 with cautious guidance.
Growth will be quite different among companies
Growth will vary significantly across companies depending on mega-deal ramp-up, vertical exposure and discretionary spending. JM Financial Institutional Securities said all available guidance from global competitors points to a decline in growth in calendar year 2024. The cut to the Accenture guidance further underlines this trend.
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