On Friday, shares of prominent Indian IT firms experienced sharp declines, with Tata Consultancy Services falling over 5%, Infosys dropping more than 7%, and Tech Mahindra decreasing by over 4%. This downturn was triggered by Accenture's announcement that it had revised its revenue growth forecast for the financial year ending August 2026 from a range of 4% to 5% down to 3% to 4%.
Accenture's CEO, Julie Sweet, highlighted a revenue miss of $90 million and a $100 million impact from the Middle East during a discussion of the company's third-quarter results. Additionally, global brokerage Citi expressed caution regarding the Indian IT sector, noting that the Nifty IT index is trading at approximately 16 times one-year forward earnings, compared to Accenture's 10 times.
Citi's report pointed to concerns over AI disruption, increased competition, and macroeconomic uncertainties as factors contributing to the challenges facing the sector in the near term