Indian IT Stocks Rise on Accenture's Robust Q2 Earnings

Market Overview

Indian IT stocks traded higher on Friday, driven by improved sentiment following Accenture's Q2 earnings. The Nifty IT index rose over 2%, fueled by strength in the broader Indian stock market. Oracle Financial Services Software led the gains, surging nearly 5%, while Tech Mahindra, HCL Technologies, Persistent Systems, Infosys, and Mphasis gained over 2% each.

Accenture's Q2 Earnings

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Accenture reported robust Q2 earnings, with a 4% year-on-year (YoY) growth in revenue in constant currency (CC) terms to $18 billion. This marginally exceeded street estimates of $17.9 billion. Consulting revenue grew 3% YoY (CC), while managed services (outsourcing) rose 5% YoY (CC). New bookings increased 6% YoY to $22.11 billion, with consulting bookings up 8.2% and outsourcing bookings growing a relatively modest 3.3%.

Guidance and Outlook

Accenture raised the mid-point of its FY26 organic growth guidance by 50 basis points to 3.5% YoY, compared with 4% organic growth in FY25. This moderate increase in guidance is viewed as an incremental positive for Indian IT companies.

Indian IT Sector Outlook

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Brokerages largely interpret Accenture's results as a modest positive for the Indian IT sector. Indian IT companies continue to face a dual challenge of macroeconomic headwinds and productivity shifts driven by generative AI. However, long-term outlook for the sector remains constructive, with generative AI expected to unlock significant growth opportunities. Nuvama Institutional Equities and JM Financial maintain a constructive view on the sector, citing sustained demand in outsourcing and managed services, resilient growth in BFSI and APAC markets, and attractive valuations. Antique Stock Broking prefers mid-cap names such as Coforge and Mphasis, citing their positioning in managed services, niche verticals, and AI-ready delivery models.

Brokerage Views

• Nuvama Institutional Equities: Long-term outlook remains constructive, with generative AI expected to unlock significant growth opportunities.
• Antique Stock Broking: Prefers mid-cap names such as Coforge and Mphasis, citing their positioning in managed services, niche verticals, and AI-ready delivery models.
• JM Financial: Expects approximately 4% constant currency growth for Indian IT firms in FY27, and believes concerns around zero terminal growth are overstated.