The Nifty IT index declined 2.2% to touch an intraday low of 26,999.75 on Tuesday, with 9 out of 10 stocks trading in the red while Oracle Financial Services Software was the only gainer at 1.2%. According to latest market data, TCS, Infosys and Wipro were down 3% each, while LTM, Tech Mahindra and HCL Technologies were trading lower in the range of 1% to 2%. The decline was attributed to a weaker close on Wall Street, with both the S&P 500 and Nasdaq indices ending lower on Monday, weighed down by losses in megacap technology stocks such as Alphabet, which dropped 5%. Among US technology stocks, Meta, Amazon, and Microsoft recorded losses ranging from 2.3% to 4.7%, creating negative sentiment that spilled over to Indian IT markets. In the past three weeks, the Nifty IT index tanked 13% as against 2% rise in the Nifty 50, while in the past six months, Nifty IT index plunged 31% compared to 8.4% fall in the Nifty 50.
Accenture's disappointing performance has raised concerns about the broader IT sector recovery prospects. The Julie Sweet-led company has cut its full-year revenue forecast and expects a turnover of between $17.75 billion to $18.4 billion Q4FY26, falling short of Bloomberg analysts' consensus estimates of $18.47 billion. As per INVAsset PMS analysis, the guidance cut signals a softer demand outlook for the Indian IT sector, with consulting demand remaining weak and discretionary spending yet to recover. Accenture now expects annual revenue growth of 3% to 4% in constant currency terms, compared with its earlier forecast of 3% to 5%. Excluding the approximately 1% impact from its US federal business, the company expects revenue growth of 4% to 5%, lower than its previous outlook of 4% to 6%. Accenture reported third-quarter revenue of $18.7 billion, broadly in line with expectations, but reduced its annual growth outlook amid continued uncertainty in client spending and disruptions in the Middle East. Accenture trimmed its revenue outlook largely due to the impact of the West Asia crisis on the company's consulting business, as per the official announcement.
The nearly 28% correction in the Nifty IT Index over the past year has revived debate over whether investors should consider sector-specific IT index funds. According to Mint analysis, experts broadly agree that Nifty IT Index Funds should not be viewed as core portfolio holdings, but opinions differ on whether the current correction offers a favourable entry point. Nirali Bhansali from Samco Mutual Fund suggests retail investors should exercise caution, noting that AI's evolution is beginning to challenge traditional IT revenue streams. However, Nishchal Jain from Share.Market by PhonePe believes the ongoing correction may offer a long-term accumulation opportunity through SIPs. Tanvi Kanchan from Anand Rathi notes that Nifty IT Index Funds are essentially concentrated bets on large-cap IT companies, with TCS, Infosys, HCL Tech, Wipro, Tech Mahindra and LTIMindtree making up the bulk of the index weight. Gaurav Arora from Sahi suggests the sector should be viewed as a tactical allocation, with the index trading near 19x earnings, below historical averages.
Analysts at Kotak Securities highlight that the key concern for IT services firms is that productivity improvements in software engineering are occurring much faster than in non-software domains. This increases the risk of lower effort requirements, reduced billing volumes, and pricing pressure for traditional application development and maintenance contracts. As a result, companies with larger exposure to application services may face greater disruption than peers focused on infrastructure, cybersecurity, engineering services, or BPO. The pace at which enterprises integrate AI models into software delivery workflows will be the key factor determining the magnitude of disruption for the IT services industry over the next three years. For Indian IT services, the read-through remains largely unchanged - AI-led demand and large deal activity are supporting growth, but the broader recovery is still gradual rather than broad-based, analysts said. Nomura believes that the West Asia conflict is expected to have some effect on the revenues and deal bookings in Q1-FY27 for the Indian IT majors.
IT stocks rebounded on Monday after the sectoral index plunged to 26,634.50 on Friday, the lowest level seen by the sectoral index since April 2023. According to The Economic Times, the Nifty IT index gained 1.3% to 27,785 on Monday, as seen at 10:10 am, with Coforge, OFSS, Tech Mahindra and Persistent Systems shares gaining 2-3%, while those of Infosys, LTI Mindtree, HCL Tech, Mphasis, Wipro and TCS rose around 1% each. This recovery comes after the sector's worst single-day decline of 2026, when the Nifty IT index plunged over 6% after Accenture lowered its growth forecast. The rebound follows the sector's worst single-day decline of 2026, when the Nifty IT index plunged over 6% after Accenture lowered its growth forecast. The recovery suggests that while investor concerns remain, the sharp sell-off may have created attractive entry points for some investors, with analysts noting that valuations are turning attractive despite persistent volatility.
