Accenture warning sparks selloff in TCS and Infosys

On Friday in Mumbai trading, Tata Consultancy Services and Infosys led a broad selloff in Indian information-technology stocks after Accenture lowered its revenue growth forecast and warned of weaker client demand. The Nifty IT index dropped as much as 5.8%.

Accenture’s fiscal third-quarter results showed revenue of $18.72 billion, a 6% increase year on year, and came in below market estimates. The company narrowed its full-year growth outlook to 3%–4% in local currency from a prior 3%–5% range. It gave fourth-quarter revenue guidance of $17.75 billion to $18.4 billion and reported new bookings of $19.3 billion, down about 2%.

Shares of Tata Consultancy Services, Infosys and HCLTech fell sharply. Infosys declined as much as 8%, TCS slid about 5.4%, HCLTech and Tech Mahindra each lost over 5%, and Wipro dropped more than 4%. The broader market opened lower, with pressure on the Nifty 50 and the Sensex.

Market participants treated Accenture’s update as a read-through for demand at large outsourcing and consulting firms because Accenture competes with Indian exporters for digital transformation, cloud migration, consulting and managed-services contracts.

Accenture said demand remained concentrated in areas such as artificial intelligence, cloud, data and cybersecurity, and announced deals totaling $4.18 billion to expand its industrial cybersecurity business.

Analysts at Goldman Sachs wrote that the results pointed to limited demand visibility across key client markets and that the decline in bookings and the lowered guidance reflected slower client decision-making on large transformation projects.

Trading on Friday reduced sector valuations as investors adjusted growth expectations for major Indian IT exporters after the update.