Three reasons why tech stocks are falling today: Nifty IT Index slips 1%, Infosys slides 3%

The Indian tech stocks are under pressure in Monday’s trade after the global IT bellwether Accenture’s commentary on the client push for Gen AI-led programs. The Nifty IT index was down more than 1.4%. All the stocks were trading in the red.

Infosys shares declined the most among the basket of tech stocks, falling 3% to a low of Rs 1,575.40. It was followed by HCL Tech’s share price lost 2.1% to an intra-day low of Rs 1,702.40. The stock price of Tata Consultancy Services pulled back 2% to an intra-day low of Rs 3,3,370. Other tech stocks also followed suit.

Accenture Q3 result

Accenture’s Q3 results were ahead of expectations. The street is worried about the soft booking trend and the commentary by Accenture. They continue to see an elevated level of uncertainty in CY25 versus CY24, albeit with clients prioritising large-scale reinventions. The company highlighted how clients are diving head-first into GenAI-led programs. This is in contrast to Indian vendors’ stance that deals still remain centred around cost, takeout.

That said, the Management sounded cautiously optimistic and upgraded the lower end of their FY25 revenue growth guidance to 6–7% from 5–7% YoY (CC) with an inorganic contribution of 3%.  

Nuvama on Accenture: Strong numbers despite uncertainty

Accenture delivered solid growth in Q3 FY25 despite elevated macro uncertainty. The company raised its FY25 revenue guidance once again, supported by lower-than-anticipated headwinds, said Nuvama. Its Q4 guidance, too, appears solid given the 2% headwind from Federal business. Managed services deal wins declined 9.8% YoY, although the book-to-bill ratio remained healthy at 1.2x, which provides reasonable growth visibility over the coming quarters, Nuvama added. “We view the results as slightly positive for Indian IT and maintain our positive stance on the sector, over the medium to long term, as we expect recovery in the macro environment to accelerate enterprise tech spending,” said Nuvama. 

Kotak Securities on IT: Demand scenario not much changed 

Accenture’s booking momentum slowed down, including in generative AI. “Accenture is bringing all its services together into a single integrated business unit called ‘Reinvention Services’, likely to increase cross-selling and stitch together multi-service deals, in our view,” said Kotak Securities. Indian IT companies are likely to see no change in demand, and the environment is not conducive for healthy deal wins.