US-listed shares of Indian software firms had a weak opening on Thursday (March 21), after their global peer — Accenture — lowered its revenue guidance for the fiscal 2024.
The Dublin-based software firm witnessed its biggest single-day fall since March 2020, after it trimmed its full-year revenue growth guidance to 1% to 3% from an earlier forecast of 2% to 5%. The stock of Accenture tanked more than 8% in Thursday’s trade.
The mixed earnings and lowered guidance of Accenture dragged American Depositary Receipts (ADRs) of both Infosys and Wipro. While the ADR of Infosys plunged as much as 4.2% in intra-day trade, Wipro witnessed a fall of close to 3%.
A similar magnitude of fallback in India will see the index resuming its losing streak. The Nifty IT Index snapped a four-day losing streak on Thursday with a gain of close to 1%.
Further, Infosys – the most weighted stock on Nifty50 after HDFC Bank, Reliance Industries, ICICI Bank and Larsen & Toubro is also capable of influencing the Nifty50’s direction. IT stocks together command a weight of 14.5% on Nifty50.
According to Jefferies, Accenture reported an in-line quarter but trimmed its forecast as H2 acceleration stalls. "The weakness appears to be in Consulting, which fell short of our estimate," observed Jefferies post results.
What is more worrying is the continued pullback on non-discretionary spending in the sector. The biggest drop in Accenture shares post-Covid pandemic wiped out $18.3 billion of market capitalisation on Thursday.
To put this in perspective, the loss in shares of Accenture is almost the entire market capitalisation of LTIMindtree. The country’s fifth-largest IT firm boasts a market capitalisation of $18.4 billion as of Thursday’s close.
Additionally, IT stocks across the globe reacted alike to the poor set of numbers. While the stock of Cognizant slid 3%, Capgemini on Euronext dropped 4.1%.
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