Indian IT stocks slump up to 7% as Accenture cuts revenue outlook, fueling fresh concerns over sector growth

Pedestrians walk past a digital broadcast displaying share prices on the facade of Bombay Stock Exchange (BSE) on the day of India's general election result in Mumbai on June 4, 2024.

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Stocks of major Indian information technology companies fell as much as 7% on Friday after global professional service giant Accenture lowered its revenue guidance, souring sentiment toward the sector.

Shares of India's largest IT company, Tata Consultancy Services, were down over 5%. Infosys dropped more than 7% while Tech Mahindra declined over 4%. The benchmark Nifty IT Index slid more than 5%.

Accenture on Thursday cut its revenue growth guidance for the financial year ending August 2026 to between 3% and 4% from its previous forecast of 4% to 5%.

"On the revenue side, we missed revenue consensus by $90 million, and we had a $100 million impact from the Middle East," Accenture CEO Julie Sweet told CNBC's Squawk on the Street on Thursday, discussing the company's third-quarter results.

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Global brokerage Citi said Thursday it remains cautious on the Indian IT sector, noting that the Nifty IT index trades around 16 times one-year forward earnings, while Accenture trades at 10 times.

"We have been cautious given AI disruption, increased competitive intensity, GCC trends, etc.; the macro uncertainty increases the challenges near term," as per Citi's note.