Indian IT stocks, including Infosys, TCS, HCL Tech, Tech Mahindra, and Wipro, experienced notable gains of 2-3% in early trading on Friday, June 21. This rally significantly boosted the Nifty IT index, which surged nearly 3%, while the broader Nifty 50 also achieved a fresh record high of 23,667, rising approximately 0.4%.
As of 9:30 am, the Nifty IT index was up 2.16% at 35,690, with all 10 components trading in positive territory. Stocks such as Persistent Systems, LTIMindtree, and Coforge led the gains, each climbing over 3%. Concurrently, the Nifty 50 was 0.21% higher at 23,616.
Accenture’s quarterly financial report, released on Thursday, played a pivotal role in the surge of Indian IT stocks. Despite reporting a 1% decrease in revenues in US dollars, Accenture saw a 1.4% increase in local currency terms. The company expects fourth-quarter revenues for fiscal 2024 to range between $16.05 billion and $16.65 billion, reflecting a 2-6% growth in local currency, factoring in a negative 2% foreign-exchange impact compared to the previous year.
The positive reception to Accenture’s results is viewed as a key performance indicator for Indian IT firms, signaling potential demand recovery within the sector. Analysts and investors closely monitor Accenture’s financials, considering them indicative of global IT services demand.
Kotak Institutional Equities highlighted, “Accenture’s results show positive elements such as strong booking growth and accelerated year-on-year growth rates, which could significantly benefit Indian IT stocks.”
Despite facing challenges over the past few quarters, Indian IT stocks have demonstrated resilience. The Nifty IT index has gained approximately 30% over the last two years, although it trails the Nifty 50’s 54% rise during the same period. In the past year, the underperformance gap has narrowed, with the Nifty IT index rising 21% compared to the Nifty 50’s 25%.
Emkay Global Financial Services underscored the importance of Accenture’s steady guidance for fiscal 2024, suggesting stability that could support Indian IT companies amid expectations of economic recovery and potential interest rate cuts.
However, uncertainties remain regarding the sector’s outlook. Nirmal Bang cautioned that demand conditions remain unchanged, characterized by slow decision-making and subdued discretionary spending. The firm maintained its cautious stance on the Indian IT services sector, emphasizing potential downward revisions in revenue and earnings for fiscal years 2025 and possibly 2026.
The evolving landscape suggests that while Accenture’s optimistic outlook may provide a temporary boost to Indian IT stocks, sustained recovery hinges on broader economic conditions and global IT spending trends.
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