IT sector back in focus as Accenture raises guidance; Brokerages maintain ‘cautious’ to ‘mildly positive’ stance – Markets

IT Sector Outlook: The IT sector has been under pressure recently. The Nifty IT index, which typically tracks 10 major Indian IT stocks, has declined nearly 10 per cent over the past month. Ongoing geopolitical tensions in the Middle East have further weighed on the sector.

While on the positive side, recent earnings from Accenture have brought renewed attention to the Information Technology sector, particularly after the company revised its guidance.

Accenture Guidance

Accenture has raised its full-year revenue growth outlook to 3–5 per cent in local currency terms, compared to its earlier guidance of 2–5 per cent. The comapny raises full-year free cash flow expectation to be in the range of USD 10.8 billion to USD 11.5 billion.

Additionally, new bookings increased by 6 per cent year-on-year to USD 22.1 billion, indicating continued deal flow despite macroeconomic uncertainty.

Following this news, as of 11:20 am, the Nifty IT sector was up nearly 2 per cent at 29,129.95 points. The index had risen as much as 2.3 per cent earlier in the session.

Considering the recent developments surrounding the Nifty IT sector, several brokerages, including Citi, Nuvama, and Motilal Oswal, have shared their perspectives, ranging from cautious to mildly positive.

Brokerages on NIFTY IT outlook

Citi maintains a ‘Cautious’ stance

Citi remains cautious on Indian IT, noting that Accenture’s revised FY revenue guidance is largely in line with expectations, although bookings were slightly weaker.

According to the brokerage, Indian IT stocks are trading at around 16x one-year forward P/E, while facing headwinds such as AI disruption, the shift toward Global Capability Centres (GCCs), and rising competition. Macro uncertainty further clouds near-term growth prospects.

Despite a nearly 25 per cent correction in the NSE IT index this year, valuations have only moderately eased, Citi notes.

Motilal Oswal Maintains Neutral View

Motilal Oswal (MOSL) also maintains a neutral stance on the Indian IT sector, highlighting that client budgets for 2026 are expected to remain largely unchanged.

The brokerage adds that ongoing geopolitical tensions and escalating conflicts introduce further uncertainty, which is not yet fully reflected in company outlooks.

While Accenture has indicated that foundational work in AI is gaining traction, MOSL believes this momentum is not strong enough to drive a meaningful acceleration in demand.

Nuvama Sees Mild Positivity

Nuvama maintains a mildly positive outlook on Indian IT following Accenture’s performance.

The company reported steady growth, with revenue at the upper end of its guidance and a slight upgrade to its FY26 outlook, signalling stable demand conditions.

This is encouraging for Indian IT firms, as demand appears resilient despite macro uncertainties.

Nuvama also believes that Generative AI (GenAI) will act as a key long-term growth driver, supporting sustained momentum and transformation-led spending in the sector.

Nifty IT stocks performance

Nifty IT stocks have shown weak performance across most timeframes. The index remained nearly flat over the past week but declined 9.20 per cent in one month. Losses deepened for the time frame of three months and six months.