Nifty IT drops 3.65% as Accenture warns on FY27 demand

Why Indian IT stocks came under pressure

Indian information technology stocks sold off sharply after weak signals from global peers renewed concerns about demand. The sector’s worries around artificial intelligence, discretionary tech budgets, and geopolitical uncertainty resurfaced in a big way. Accenture Plc, a key global bellwether for enterprise technology spending, trimmed its outlook and flagged near-term pressure. That combination pushed investors to reassess near-term growth visibility for Indian IT services. Brokerages including Jefferies and Morgan Stanley pointed to softer demand cues for the sector, adding to the caution.

What happened to the Nifty IT index on June 23

The Nifty IT index fell sharply in early trade and then recovered part of the damage by the close. It ended the session down 3.65% after bouncing from an intraday slide of more than 6%. The intraday decline was triggered by Accenture’s lower FY27 revenue guidance, which set the tone for risk-off positioning in IT. Another reported measure of the day’s move put the decline at about 2% on June 23 as selling intensified after the Accenture read-through. Either way, the session was marked by heavy opening pressure and selective buying later.

Accenture’s guidance cut and what it signalled

The immediate trigger was Accenture narrowing its FY27 revenue growth outlook to 3% to 4% from an earlier forecast of 3% to 5%. Accenture cited the impact of the West Asia crisis on its consulting business while discussing the revised outlook. Separately, Accenture also trimmed sales growth guidance for 2025-26 (Sept-Aug) and said near-term pressure remains. For Indian IT majors, Accenture’s commentary matters because it often shapes global client sentiment on consulting and discretionary technology work.

Shift from panic selling to selective buying

The trading pattern suggested a change in behaviour through the day. The open saw panic-style selling as investors reacted to the guidance downgrade and the broader risk-off mood in global technology. As the session progressed, losses narrowed as some investors stepped in selectively, even though the headline worries did not go away. Market participants linked the late recovery to bargain hunting rather than an improvement in the underlying demand narrative. Concerns about a potential slowdown in technology spending still kept the mood cautious.

Which Indian IT stocks were hit the hardest

Large-cap and midcap IT names came under pressure as investors reassessed growth expectations. Stocks cited as being under pressure included Infosys, TCS, Wipro, HCL Tech, Tech Mahindra and Coforge. In one market snapshot, Infosys and Mphasis fell 8% each, while Tata Consultancy Services (TCS), Tech Mahindra and Persistent Systems dropped 7% each. Another report also noted TCS was down around 6% at one point during the selloff. The moves highlighted how quickly sentiment can turn when global guidance weakens.

What brokerages and market participants flagged

Jefferies and Morgan Stanley highlighted soft demand signals for the sector after Accenture’s outlook. Market commentary also pointed to a freeze in discretionary spending and delayed deal pipelines, reinforcing the view that decision-making cycles are extending. The broader concern is that even if operating performance looks stable, new spending approvals can slow, pushing out revenue conversion. Some commentary suggested that expectations of a tech rebound may need to be tempered after the Accenture reset.

Macro risks: geopolitics, rates, and global tech sentiment

Beyond company-specific triggers, investors also weighed macro risks that influence IT budgets and valuations. Geopolitical tension and economic uncertainty were flagged as factors weighing on demand, particularly when clients defer non-essential tech spending. Market participants also pointed to pressure across global technology stocks and cautious investor sentiment. Stronger US inflation data was cited as reducing expectations of aggressive US Federal Reserve rate cuts, which can impact global risk appetite. Sustained foreign institutional investor (FII) selling was also flagged as a headwind for large-cap stocks, even in fundamentally strong sectors.

Structural worry: AI and the labour-intensive model

India’s IT sector, estimated at $115 billion, is also facing a longer-term debate about how AI reshapes services delivery. A key investor concern is whether AI-driven automation disrupts the labour-intensive, headcount-based outsourcing model that has historically supported margins and growth. Reports noted rising concern around Generative AI (Gen AI) and potential structural implications for traditional services delivery. One market narrative linked the latest leg of the selloff to accelerating AI-driven change, including shorter timelines and more automation. Some commentary also warned that routine-heavy delivery areas could see job pressure as fewer people may be needed for the same outcomes.

Recent drawdown and levels investors tracked

Selling pressure was not limited to a single session, with multiple reports pointing to a broader correction. Over the past four trading days, the IT index was reported to have fallen about 9%. Another account said the index shed around 12% in three days when measured at the day’s low. The Nifty IT index was also described as being at its lowest level since April 21, 2023 in one report, while another said it hit its lowest level since May 2023. A separate market update noted the index fell over 5% to an intraday low of 31,422.60, marking its lowest level since October 2023.

Key facts at a glance

What to watch next

The immediate focus remains on whether global client budgets stabilise or continue to shift toward tighter discretionary spending. Investors are also tracking how quickly deal pipelines normalise, given repeated references to delayed decision-making. On the structural side, the market is likely to keep pricing the AI question alongside quarterly execution and deal wins. With Fed rate expectations and global tech sentiment in play, IT may remain sensitive to macro headlines as much as company updates.

Conclusion

The Nifty IT fall reflected a mix of near-term demand caution and longer-term concern about AI-led disruption. Accenture’s guidance reset and comments on consulting pressure amplified those worries and triggered a broad selloff in Indian IT names. The index recovered from the day’s lows, but the close still showed meaningful risk aversion. Next signals are expected from global tech commentary, client spending trends, and further macro developments that influence risk appetite and IT budgets.