IT stocks drop up to 5% after Accenture trims FY24 revenue growth guidance

IT stocks fall: Technology behemoths such as Infosys, TCS, HCLTech, Wipro, Tech Mahindra, and LTIMindtree, all key components of the Nifty 50 index, are witnessing major losses ranging from 3 per cent to 5 per cent in their share prices. The downturn comes after Accenture revised its financial year 2024 revenue growth guidance on Thursday.

As of 10:35 am, HCLTech fell the most, tumbling over 3 per cent, while Wipro dipped 2.40 per cent, and Infosys saw a 1.70 per cent decrease in its share value. TCS and Tech Mahindra also saw nearly a 1 per cent drop in their stock prices.  

HCLTech stands out as the biggest loser among the group, suffering losses exceeding 5 per cent intraday, marking its most considerable single-day decline in 15 months.

“IT is likely to remain under pressure in view of the poor guidance from Accenture. Any sharp intraday up moves may face selling from FIIs since the US bond yields continue to remain high,” said V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

Accenture's latest guidance indicates an anticipated Q3FY24 revenue growth between -1 per cent to +3 per cent year-on-year (YoY) in constant currency (CC). 

Additionally, the FY24 revenue growth forecast has been adjusted to 1.0 per cent-3.0 per cent in CC, down from the previous projection of 2.0 per cent-5.0 per cent. Notably, the FY24 revenue guidance incorporates a 3 per cent contribution from inorganic sources.

Management commentary suggested ongoing weakness in discretionary spending, somewhat offset by increased focus on cost efficiency measures. Analysts at brokerage firm Motilal Oswal, following discussions with Indian IT peers, also noted a cautious spending outlook in the near term, likely impacting their operational performance for FY24.

As of 10:55 am, Nifty IT index was trading 1.89 per cent lower at 35,347.15 level.