Mumbai: The Indian stock market had a brutal sell-off this morning, with almost Rs 2 lakh crore of investor wealth wiped out as the overall Nifty IT index crashed nearly 6% in early morning trades. US-based Accenture’s lowered revenue guidance acted as the main trigger, with the company expecting to see a $100 million impact on its consulting business due to the West Asia war. Along with that, the company is expecting to see a free cash flow in the range of $10.8 billion to $11.5 billion as the company witnesses a 1% impact from its US Federal business, which will further impact its revenues.
Major Fortune 500 companies are expected to defer, pause or downsize their discretionary IT consulting projects, mainly due to inflationary pressures and higher interest rates. Along with that, IT companies have faced challenges in implementing generative AI across their legacy IT infrastructure, affecting their cloud migration, ERP implementation, and general software outsourcing pipelines.
As India’s IT service companies rely heavily on the exact same Fortune 500 clients like Accenture, the guidance is being seen as a proxy indicator for earning downgrades across the board.
- Infosys Limited (INFY): Opened 7.5% lower, emerging as the single heaviest drag on the Nifty index.
- Tata Consultancy Services (TCS): The country’s largest software exporter slid 5.2%, with institutional investors holding their blocks.
- HCL Technologies (HCLTECH): Dropped 6.1%, despite its e-solutions contract announcement days earlier.
- Wipro & Tech Mahindra: Witnessed sharp corrections, losing 5.8% and 4.9% respectively, as retail stop-loss triggers were hit across brokerages.
This market correction has put the recent recovery streak of the markets in question, as domestic management teams have expressed concerns about the hope that global spending would bounce back by the second half of the year.
