IT equities drive down Sensex and Nifty, while HCLTech falls more than 4%

Information technology (IT) equities had a steep decline on Friday, resulting in a dismal start for benchmark stock market indexes.

At 9:54 am, the NSE Nifty50 was down 44.35 points to 21,967.60, while the S&P BSE Sensex was down 253.36 points to 72,387.83. As with the benchmarks, broader market indexes also lost momentum.

While the majority of industry indexes saw gains, the IT index saw an almost 3% decline.

With a decline of more than 4.5 percent, HCLTech was the biggest loser on the Nifty50 index. With losses ranging from 2 to 4 percent, Wipro, LTIM, Infosys, TCS, and Tech Mahindra rounded out the top six losers on the 50-share index.

Conversely, Apollo Hospitals, BCPL, Cipla, Sun Pharma, and ITC were the biggest gainers.

Accenture lowered their revenue prediction for the fiscal year 2024, which diminished expectations of a demand rebound and caused a severe decline in IT equities. The firm reduced its projected increase in sales from 2–5% to 1-3%.

This “pours water on the rebound narrative,” according to a note from Ambit Capital’s Ashwin Mehta. He also emphasized that Accenture’s “slow decision-making, increased client spending restrictions, and indication of a pullback in smaller deals persisting were negatives.”

IT company values seem to have been negatively impacted by Accenture’s warning during the trading session.

“As the demand outlook for the IT sector seems to be worsening with no recovery in sight, Nifty IT valuations… seem rich,” brokerage firm Jefferies said.

The report observed that the price of IT equities was 26 times their profits, which represented a premium of 29% over the Nifty50 and 13% above their five-year average.

Prior to the trading session, Choice Broking’s research analyst, Deven Mehata, warned that Accenture’s sales forecast would cause IT stocks to decline. “Traders who have long positions ought to keep their stop loss at 21,800 levels as a closing strategy,” he said.

In a pre-market statement, Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd., said that Accenture’s updated revenue outlook may cause IT equities to decline.

Additionally, he offered his weekly stock recommendations. Zomato, Bank of Baroda, and IndiGO all have encouraging weekly trends. Important trade: Buy Indigo (CMP 3290) and set aggressive objectives at 3701 and 3341/3421, citing momentum, the speaker said.