Mumbai, June 19 (IANS). Heavy selling was witnessed in IT stocks on Friday after global technology services company Accenture cut its revenue growth estimates and indicated weak demand. Due to this, the Nifty IT index fell by more than 6 percent and investors’ concerns about the pace of recovery in global technology spending increased again.
The IT index fell 6.43 percent or 1,831 points to the day’s low of 26,634.50 in early trade. It was the worst performing sectoral index in early trade.
However, till the time of writing the news, Nifty IT was trading at the level of 26,956.90 with a decline of more than 5 percent i.e. 1,500 points.
Selling in IT stocks was led by Infosys, whose shares fell as much as 7.4 per cent. Tata Consultancy Services (TCS) declined 5.9 percent, Tech Mahindra declined 4.5 percent and HCL Tech declined 4 percent.
Additionally, shares of Persistent Systems fell nearly 5 percent, while LTIMindTree fell more than 4 percent. Along with this, Coforge slipped nearly 4 per cent and Wipro slipped more than 3 per cent.
The effect of the selling was also visible on the broader market. IT stocks like KPIT Technologies, Tata Elxi, Hexaware Technologies and L&T Technology Services were among the biggest losers in the BSE Midcap index and recorded sharp decline.
This decline was seen after the huge weakness in the shares of Accenture overnight and the decline in American Depository Receipts (ADRs) of Indian IT companies.
Selling in ADRs of Indian IT companies also increased after global consulting and technology services company Accenture cut its revenue growth forecast for FY2026.
According to market experts, Accenture’s weak estimates have led to selling in ADRs of Indian IT companies.
“There may be buying in IT stocks at lower levels as their valuations are now becoming attractive,” experts said.
However, he believes that if the earnings estimates of companies continue to decline in the coming time, then pressure on IT stocks may remain.
Experts said that despite the recent sharp decline, valuations of Indian IT companies are still higher than those of Accenture. Accenture is currently trading at a valuation of almost nine times its expected earnings over the next one year.
Given the current uncertainties, analysts have maintained a cautious stance on the sector.
Accenture shares fell nearly 18 percent overnight. Whereas Infosys’s ADRs fell by about 10 percent and Wipro’s ADRs fell by more than 3 percent.
The company reported revenue of $18.7 billion in the third quarter, but lowered its growth forecast for the full year due to continued uncertainty in customer spending and revenue pressure related to events in West Asia.
Apart from this, the company’s new bookings were also less as compared to last year.
This fall in IT stocks has come at a time when the sector was under pressure after the US Federal Reserve’s signals earlier this week. The Fed had indicated that interest rates could remain high for a long time, which weakened investor sentiment towards global IT stocks.
In the last one year, the Nifty IT index has fallen almost 30 percent from the level of 38,600.
Major indices of the domestic stock market also remained weak in morning trade. The Sensex fell by more than 700 points, while the Nifty fell by nearly 200 points and slipped below the 24,000 level.
–IANS
DBP
