The trading day on Friday saw a chaotic beginning for the Indian stock market, with a major early loss followed by an impressive comeback, especially in the Information Technology (IT) sector. Still, the IT industry suffered a significant blow, as a whole declining by 1.90 percent. The main cause of this decline was the sharp decline in the stock prices of major participants in the industry, including TCS, Infosys, Wipro, and HCL Tech, which all had declines of up to 6 percent.
HCL Technologies had a 5.62 percent loss in its shares to Rs 1,507.50, while Wipro and LTIMindtree saw more than 4 percent declines to Rs 479.45 and Rs 4,945.05, respectively. TCS shares were down about 3% at Rs 3,856, while Tech Mahindra and Infosys also saw losses, with drops of 3.57 percent and 3.7 percent, respectively.
Due to ongoing financial instability, global IT giant Accenture decided to lower its revenue estimate for the fiscal year 2024 from 2–5% to 1-3 percent, which set off a chain reaction that resulted in the crash of shares in the IT industry. This change had a significant effect on Indian IT equities during the Friday trading session, causing a general slide that saw some shares see significant declines of up to 6%.
Though Accenture’s revenue reduction is a slight setback for Indian IT services companies, analysts at Nuvama Institutional Equities noted that overall performance is not anticipated to be materially impacted. Regarding the direction that IT stocks will take in the future, opinions differ.
According to Nuwama, there isn’t a trend that suggests that IT stocks will continue to fall, which gives her hope. They expect a spike in demand that could increase business profits. On the other hand, foreign brokerage firm CLSA remained cautious, speculating that the revenue decline could be offset by a significant uptick in the second half of the year. In the meantime, Motilal Oswal advised Indian IT firms to proceed with caution when negotiating the uncharted territory.
Industry observers predict that Indian IT companies will face mixed results. MK cautioned that a more watchful approach would be required, but it predicted that these companies would receive support for growth in the fiscal year 2025. Nonetheless, Nomura voiced optimism regarding the Indian IT sector’s chances of recovery in the first half of FY25.
Small- and mid-cap stocks were also impacted by the fall, in addition to large-cap firms. In the wider markets, declines of between 2 and 4 percent were seen by IT counters like Oracle Financial Services Software, KPIT Technologies, Mphasis, BirlaSoft, L&T Technology Services, Persistent Systems, Coforge, and Mphasis. The BSE IT index also saw a decrease in the early session that was greater than 3 percent.
Indian IT stocks are going through an unpredictable period as uncertainty surrounds the global economic scene. Regarding the sector’s chances for recovery, some analysts are cautiously positive, but others caution that there are still uncertainties in the market and advise exercising caution. Stakeholders are keeping a close eye on indicators to predict the direction of Indian IT stocks in the upcoming months, as the market is showing signs of sensitivity to developments nationwide.
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