The Indian IT sector is experiencing significant volatility with Accenture's 18% fall triggering a ₹1.35 lakh crore meltdown for major Indian IT stocks including TCS and Infosys. According to Jefferies, the revised revenue growth guidance suggests further growth moderation, with soft growth on a low base likely raising concerns about longer-term growth outlook. Motilal Oswal noted that outsourcing bookings are down 14.7% YoY, after decelerating sharply in the previous quarter. Despite these challenges, Nomura maintains that AI will continue to drive demand for core fundamental elements like cloud, data and platform modernisation services, as clients move beyond proof of concepts to live use cases. The latest developments show Infosys falling 10% and Wipro nearly 4% following Accenture's trimmed FY26 revenue guidance, raising concerns for TCS, Infosys, Wipro and peers amid weak enterprise tech demand, despite continued AI and cloud investments.
According to Nomura Singapore's Head of Global Macro Research Robert Subbaraman, India is among the economies that benefit most from the recent drop in crude oil prices. As reported by CNBC TV18, oil prices have declined from around $100 per barrel to nearly $80 per barrel, representing a 20% drop. Subbaraman noted that a 10% drop in oil prices can reduce India's current account deficit as a share of GDP by 0.5 percentage points and reduce inflation by about 0.5%. This significant improvement in oil prices is expected to boost economic growth and strengthen India's fundamentals going forward.
The government's initiative to attract non-resident Indian deposits through sweetened deposit rates is expected to be a significant catalyst for India's external position. According to Nomura's analysis, this scheme could attract nearly $55 billion in overseas deposits, helping reverse pressure on India's balance of payments. As reported by CNBC TV18, this government scheme is only in place until the end of September, creating a window for non-resident Indians to respond in a big way. Combined with lower oil prices, these inflows could reduce inflation, support economic growth and strengthen the rupee, potentially reversing the negative spiral that has characterized recent months.
India's balance of payments has deteriorated significantly in recent months due to current account deficit and net capital outflows. According to Nomura's assessment, the combination of lower oil prices and the NRI deposit initiative could change this dynamic significantly. The firm expects that if oil prices stay around current levels, it will improve India's fundamentals, potentially leading to a positive spiral in the economy. This improvement could also encourage the rupee to appreciate more against the dollar, which has not been happening for a very long time. However, macro uncertainty will likely force traditional IT majors to aggressively chase M&A and mid-market client additions to replace missing legacy revenue streams.
Despite rising risks of a US rate hike, Nomura maintains its forecast for the Fed to remain on hold this year. As reported by CNBC TV18, nine out of 18 FOMC members see a rate hike this year, with eight of those nine expecting more than one rate hike. However, Nomura believes there is a political element ahead of the midterms that could influence Fed policy. The brokerage notes that investment preferences are becoming highly selective, with Nomura continuing to prefer selective buying on dips, naming large-caps Infosys and Cognizant, mid-cap Coforge, and small-cap eClerx as preferred names. Despite the current correction, Nomura believes the Middle East conflict is expected to have some effect on revenues and deal bookings in the first quarter of FY27, with indirect impacts potentially continuing into the second quarter.
