Nifty IT crash: India’s IT stocks extended their sharp decline on Friday after a weak global read-through from Accenture triggered a broad sell-off across technology counters, with analysts warning that the sector may no longer be a long-term investment theme in its current form.
The sell-off in heavyweights such as Infosys, Tata Consultancy Services and HCL Technologies mirrored declines in global peers including Accenture and Cognizant, after Accenture’s softer outlook raised concerns over demand visibility in the sector.
Speaking to ET Now, equity analyst Sandeep Sabarwal said the recent correction does not change his structural stance on the sector.
IT no longer a long-term investment theme
“One, IT as a segment, the Indian IT companies are no longer long-term investment companies as of now. Maybe they’ll transform themselves and maybe there’ll be an opportunity at some stage for them to become long-term opportunities. So they just look like trading plays at a time when they get heavily oversold, you can buy them and hope to make 12 to 15 per cent kind of returns.”
He added that the weakness in Accenture’s commentary was more reflective of macroeconomic uncertainty than technology disruption alone.
“Accenture… is more about them thinking that the overall economic outlook might not be as strong and because of that they will not grow as well as what the expectations were rather than from AI etc. So I think to that extent a lot of these concerns are already built into the stock prices of these IT services companies.”
Global weak cues trigger IT sell-off
Global IT services stocks have been under pressure after Accenture flagged slower-than-expected growth, dragging down sentiment across Indian IT counters in early trade and pushing indices to fresh 52-week lows.
However, Sabarwal said the sell-off may not be entirely disconnected from fundamentals, noting that most companies have already guided for subdued growth. “There’s no disconnect per se because most of the IT companies have guided for subdued growth except for some of the mid-cap ones which have actually guided much higher.”
He cautioned that risk may be shifting within the sector rather than disappearing altogether.
“As far as absolute price levels go, there could be bigger risk in some of the mid-cap companies rather than large-cap IT companies from the current levels.”
Despite the sharp correction, he said he does not see IT as a sector where investors should take disproportionate exposure. “It’s not a business or industry segment where investors should be looking to invest disproportionately.”
IT Sector Outlook
The broader commentary comes at a time when global technology demand is slowing amid macro uncertainty, while artificial intelligence-driven disruption continues to reshape long-term expectations for outsourcing and services firms.
While some market participants argue the correction has been overdone, sentiment remains fragile as investors reassess earnings trajectories for FY26 and beyond.
(Disclaimer: The above article is meant for informational purposes only, and should not be considered as any investment advice. ET NOW DIGITAL suggests its readers/audience to consult their financial advisors before making any money-related decisions.)
