IT stocks react to Accenture Q3 miss; market guru picks these 4 midcaps to buy now
Indian IT stocks will remain in focus today after global tech major Accenture flagged weak margins and a soft near-term outlook despite beating Q3 revenue estimates. The stock fell over 7 per cent in U.S. markets, triggering a broad sell-off in tech stocks and dragging ADRs of Infosys and Wipro lower ahead of Monday’s trade on Dalal Street.
Accenture reported revenue of $17.7 billion for the quarter ended May 31, exceeding the Street’s estimate of $17.3 billion, with growth driven by enterprise AI services. However, investor reaction was muted as the company warned of margin headwinds and a slowdown in U.S. federal IT spending due to ongoing policy changes.
Infosys ADRs slipped 4 per cent while Wipro declined 0.34 per cent on Friday. Domestic IT stocks are likely to react today, especially in the opening session, even though the Nifty IT index ended Friday’s trade up 0.84 per cent. Among largecaps, Infosys and LTIMindtree closed in the red, while HCL Tech, TCS, Tech Mahindra, and OFSS posted modest gains.
‘Opportunity to buy in sharp fall,’ says market guru
Despite the initial knee-jerk reaction, Market guru Anil Singhvi believes this weakness offers a buying opportunity for selective IT stocks. “IT stocks are no longer moving in complete sync with Accenture. Investors should use this fall to accumulate quality names like Infosys,” he said.
Singhvi emphasised that midcap IT players could offer better risk-reward going forward. “Focus should be on midcap IT stocks. Persistent Systems, Coforge, KPIT Technologies, and Mastek are better placed. These companies are showing consistent growth and operating leverage,” he added.
Sector-wide accumulation strategy
Broader than just IT, Singhvi advised investors to accumulate on declines across sectors. “Besides IT, there is buying opportunity in oil companies, NBFCs, textile, and chemical stocks. This is a good time to accumulate selectively,” he noted.
Even though Accenture’s commentary has temporarily dampened sentiment, Singhvi’s view indicates that long-term investors can consider this a buying zone, particularly in names with strong order books and digital transformation exposure.
Midcaps outperform on Friday
On Friday, midcap IT outshone the larger peers. Persistent rose 3.5 per cent, Coforge gained 2 per cent, and Mphasis added over 1 per cent. Among largecaps, HCL Tech led the pack with a 1.3 per cent rise, while TCS and Tech Mahindra closed with marginal upticks.