TCS, Wipro to Infosys: Why are Indian IT stocks falling after Accenture share price crash — explained

Stock market today: After weak guidance delivered by Accenture, the share price of the global IT major crashed over 9 percent at the New York Stock Exchange (NYSE). This led to a drop in the ADR (American Depository Receipt) shares of the Indian IT majors Wipro and Infosys. Accenture share price witnessed a sharp sell-off after the IT giant revised its full-year revenue growth expectation to 1 percent to 3 percent, which is lower than the early estimates of 3 percent to 5 percent. This significant drop in the Accenture revenue guidance hit Indian IT shares in early morning deals on Friday as the Nifty IT index is down to the tune of 3 percent. Indian IT majors Wipro, Infosys, Tata Consultancy Services (TCS), and HCL Technologies are trading red after a huge drop against their Thursday close.

IT stocks in focus

Expecting sell-off pressure in the Indian IT stocks during Friday deals, Avinash Gorakshkar, Head of Research at Profitmart Securities said, “Accenture share price crashed in US stock market after the weak guidance of the global IT major. This led to weakness in the ADR shares of Infosys and Wipro as well. As Indian IT stocks follow their ADR shares’ performance in the US stock market, Indian IT stocks are trading in the red zone in early morning deals on Friday.”

Avinash Gorakshkar went on to add that Accenture provides a good amount of business to Indian IT companies. As the business outlook of Accenture has gone weak, the market is expecting this disappointing guidance of Accenture to affect the business of the Indian IT companies.

Unveiling strategy for the IT stockholders in the Indian stock market, Saurabh Jain, Vice President — Research at SMC Global Securities said, “Accenture has revised its full-year revenue growth to 1-3 percent, which was earlier estimated at 3-5 percent. So, some pressure was expected in the Indian IT majors, especially in Infosys, Wipro, TCS, and HCL Technologies. However, for medium to long-term investors, this would be a good bottom-fishing opportunity as the rate of deal wins by the Indian IT companies has gone higher in recent quarters and that is expected to reflect in their quarterly performance. So, I would advise medium to long-term investors to cash in on this opportunity and start accumulating as these shares may become bullish if they deliver their quarterly results for the Q4FY24 period in sync with the market expectations.”

Focus shifts to Nifty IT index

Advising investors to remain vigilant about the Nifty IT index, Sumeet Bagadia, Executive Director at Choice Broking said, “The Nifty IT index has crucial support placed at 35,000 to 36,000 zone. There can be a big upside possible in the large-cap IT stocks once the Nifty IT index gives breakout at 36,300 level on a closing basis.”

Asked about the IT shares to buy today, Saurabh Jain of SMC Global Securities said, “Long-term investors can start accumulating large-cap IT stocks, especially TCS, Wipro, and HCL Technologies. These IT companies are expected to give better Q4 results due to the rise in deal wins in recent quarters.”

Disclaimer: The views and recommendations above are those of individual analysts, experts, and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.