Infosys, TCS and other Indian IT stocks fall after Accenture’s weak guidance

Mumbai: India's technology stocks Wednesday demonstrated remarkable resilience in the face of the spectacular overnight mauling of US-listed IBM on expectations of a demand recovery in the $280-billion industry, with depressed valuations spawned by a protracted bear phase since the start of 2026 seemingly providing support to locally listed outsourcing powerhouses.Analysts and money managers also said that better-than-expected Q1 results in the sector so far have eased investor concerns on these companies that were traditionally firm favourites with overseas investors.The Nifty IT index, which has fallen nearly a quarter in 2026, declined 0.7% on Wednesday, with six of its ten constituents down 0.1-1.4%. The Nifty 50 was up 0.1%.On Tuesday, tech giant IBM was pummelled 25% after its earnings came in lower than Wall Street expectations."IBM's weak results aren't directly correlated to Indian IT services, as the company saw a de-growth in the infrastructure segment after a period of high growth, typical after the high growth phase post release of mainframe's newer version," said George Thomas, fund manager, equity, at Quantum AMC. "This is why domestic IT stocks did not witness any sell-off."While IBM operates across both hardware and software services, the weakness in its recent earnings was primarily driven by a larger-than-expected decline in its hardware business. The impact on its software services segment, which is more comparable to Indian IT companies, was relatively limited. Saurabh Patwa, head of equity and portfolio manager at Quest Investment Managers said Indian IT stocks have already corrected meaningfully over the past few months, and valuations and growth expectations have been reset.132427246Bear TerritoryWhile the Nifty IT index has declined 25.25% this year, compared with 8% for the Nifty, largecap stocks like Infosys, TCS, HCL Technologies, Wipro and LTM are down 28-35% in 2026 so far.Devarsh Vakil, head of prime research at HDFC Securities said Indian IT stocks were relatively resilient, as much of the sector's weakness had already been priced in, with sector valuations correcting sharply from around 30 times to below 17 times one-year forward earnings."Recently announced first quarter results from major Indian IT companies, including TCS, HCL Tech, LTM and L&T Technology Services, were better than market expectations, easing concerns around demand and profitability," he said. "Management commentary across the sector remained constructive and optimistic, supported by improving deal pipelines, stable client spending trends, and a healthier medium-term growth outlook."While there have been bouts of upside and recovery in the nearly one-way decline of tech stocks, it has not been meaningful.Thomas of Quantum also said that while the recovery in Indian IT has not been durable, it is typical during a period of technology transition. “As AI costs and associated token prices decline and deferred discretionary spending gradually returns, we expect deal wins and earnings to improve, as indicated by management commentary in the first quarter,” he said. Others remain more skeptical of the sector’s prospects. “The sector continues to face a difficult demand environment, with weak discretionary spending and longer decision-making cycles,” said Patwa. “More importantly, companies are dealing with two structural challenges: AI-led productivity and pricing deflation, and the growing presence of Global Capability Centres in India. Both could affect sector growth and margins over the next few quarters.” ‘PICKING WINNERS’ Vakil said he prefers Coforge, Mastek, Mphasis, and Zensar Technologies among midcaps, and Infosys among largecaps. “We believe the worst may be behind for the sector and continue to prefer large-cap IT companies, given their valuation comfort and strong positioning,” said Thomas. Patwa of Quest said that the sharp correction could provide some near-term respite to largecap IT stocks, but he does not see this as a broad-based sector buying opportunity yet.

IT stocks led by TCS, HCL Technologies and Infosys rallied sharply on Monday, lifting the Nifty IT index nearly 4% despite weakness in the broader market. The sectoral index climbed to a more-than one-month high and has gained around 6% over the past two sessions.

The NSE IT index declined nearly 2% in Thursday's early trade, dragged by TCS and Infosys. TCS to announce Q1 results after market hours today.

Indian IT stocks gained on Tuesday, with Infosys, TCS, Tech Mahindra and Mphasis rising up to 4%, even as Asian technology shares came under pressure after a sharp selloff in South Korea’s chipmakers. Infosys rose nearly 4%, while TCS gained 3%. Tech Mahindra was up 3.4%, and Mphasis advanced 3%. Wipro, however, slipped 0.4%, staying weak even as the broader IT pack recovered.The move came at a time when investors are preparing for the June-quarter earnings season of Indian IT companies. The sector has been under heavy pressure for months due to weak discretionary technology spending, slower client decision-making, pressure from artificial intelligence-led productivity gains and valuation concerns.The rebound in Indian IT stocks stood in contrast to the fall in South Korea, where AI-linked chip stocks dragged the market lower. The benchmark KOSPI closed down 395.02 points, or 4.9%, at 7,656.31, after falling as much as 8.2% earlier in the session. The index is now down 16% from its June 22 record close of 9,114.55, though it remains up 82% so far this year.Circuit breakers were triggered on the KOSPI during the session, the sixth such instance this year, as volatility in semiconductor stocks remained high. Samsung Electronics and SK Hynix led the decline, ending down 6.9% and 6.1%, respectively, after both fell more than 10% intraday.Also Read: The Q1 verdict: Can TCS, Infosys, other IT results stop a Rs 17 lakh crore AI-led rout?Samsung fell even after forecasting a 19-fold jump in second-quarter operating profit. The fall showed that investors are now questioning whether strong AI-linked earnings are already priced into chip stocks after a sharp rally.For Indian IT investors, the concern is different but linked to the same AI theme. While Korean chipmakers have rallied on AI demand, Indian IT stocks have fallen because investors worry that AI could hurt billing growth, reduce manpower-linked revenue and force companies to pass productivity benefits to clients.The correction has been severe. TCS, Infosys, Wipro and LTIMindtree are now down at least 50% from their all-time highs. Across 10 major IT companies, the combined market-cap loss from peak levels is estimated at more than Rs 17 lakh crore.TCS has seen the biggest destruction in value. The stock has fallen about 56% from its all-time high of Rs 4,592.25 in August 2024 to around Rs 2,033. Its market cap has dropped from Rs 16.48 lakh crore to Rs 7.36 lakh crore, wiping out more than Rs 9.12 lakh crore.Infosys has nearly halved from its peak of Rs 2,006.45 in December 2024 to Rs 1,006. Its market value has fallen from Rs 8.30 lakh crore to Rs 4.08 lakh crore. Wipro is down 54% from its peak, while LTIMindtree has lost more than 53%. HCL Tech, Persistent Systems, Mphasis and Tech Mahindra have also seen sharp declines.The latest rise in IT shares may partly reflect bargain buying after the steep fall. But the real test will come with Q1 results and management commentary.Morgan Stanley expects a muted first quarter for IT companies and subdued commentary for the second quarter. The brokerage sees risks to FY27 revenue guidance ranges and has lowered estimates for large-cap IT companies.It has also downgraded TCS to equal-weight, saying the stock’s premium to Accenture has risen above 40%, putting valuations for the broader group at risk. Morgan Stanley expects organic revenue growth for most large-cap IT firms to drift towards 1.5-3.5%, except Wipro, where it sees a decline.Investors will now watch whether companies such as TCS and Infosys can show signs of demand stability, defend margins and explain how AI will support revenue rather than only reduce costs for clients.\(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

IT stocks rebounded sharply on Thursday, with the Nifty IT index surging nearly 4% after a four-session slide that pushed it to a 52-week low. Coforge led gains with a 5% jump, while Infosys, Mphasis, HCL Tech and Persistent Systems rose around 4%. The recovery lifted sentiment after the sector had shed nearly 7% over the previous four trading sessions.

Nifty IT index was down more than 42% from record highs and 30% since February 2026, while all its constituents remained in red as Tata Consultancy Services, Infosys and HCL ech touched multi-year lows.