Nifty IT crashes 6% to 3-year low as Infosys, HCL Tech, other IT stocks crash up to 9%. Time to buy the dip?

Shares of IT majors such as Infosys, HCLTech, TCS and others plunged up to 9% on Friday, dragging the Nifty IT index down more than 6% to its lowest level in over three years, as Accenture’s guidance cut rattled investor sentiment.

The Nifty IT index plunged to 26,634.50 on Friday, the lowest level seen by the sectoral index since April 2023. It is currently the top sectoral loser on the market today. Infosys shares led losses, crashing nearly 9%, while those of TCS, Mphasis, LTI Mindtree, Tech Mahindra, Persistent Systems and HCL Tech tumbled 4-6%.

This follows an 11% crash in Accenture’s share price on Wall Street after the consulting major revised its FY26 revenue growth guidance to 3-4%, compared with its earlier outlook of 3-5%. The company also projected fourth-quarter revenue of $17.75-18.4 billion, falling below Street expectations of $18.47 billion, according to LSEG data.

Accenture’s softer outlook may have retriggered worries that enterprises remain cautious on discretionary spending related to IT consulting and digital transformation projects, even as investments in artificial intelligence and cybersecurity continue. Indian IT companies derive a major portion of their revenue from the US economy. Hence, worries around reduced discretionary spending may have led to the sharp selloff in the stocks on Dalal Street.

Also read: TCS, Infosys, Wipro, other IT stocks crash up to 9% as Accenture lowers FY26 guidance

Should you buy the dip in IT stocks?

The sharp sell-off in Accenture overnight is the kind of move that confirms rather than introduces what has been a slowly building structural reality, said Harshal Dasani, Business head at INVasset PMS. “The Nifty IT index falling 6% is the predictable read-through. The valuation story is now the more uncomfortable conversation. Indian IT services trading at 16-18 times earnings with single-digit revenue growth expectations is expensive, not cheap,” he added.

The honest framing is that traditional IT services is increasingly looking like a sunset business in its current form, according to Dasani. “The stance on Indian IT remains firmly cautious. Selective interest stays reserved for credible AI-native and hyperscaler-aligned firms; the broader sector deserves significantly lower multiple expectations,” he added.
VK Vijayakumar, Chief Investment Strategist at Geojit Investments, however differed in his opinion, saying that buying in IT stocks can emerge at lower levels since valuations are becoming attractive after the sharp correction.Also read:Why Accenture’s warning sparked a Rs 1.35 lakh crore meltdown for TCS, Infosys, other IT stocks

Key technical levels to watch out for Nifty IT

The Nifty IT Index plunged over 6%, breaking below its previous swing low of 27,078 recorded on May 14. Technically, the index is trading below its key short and long-term moving averages, said Sudeep Shah, Head of Technical and Derivatives Research at SBI Securities.

He highlighted that the index’s RSI has slipped below 40, signaling increasing bearish momentum, while the DI- has crossed above DI+ on the ADX indicator, highlighting strong seller dominance. The 27,450–27,500 zone is expected to act as a key resistance and the trend is likely to remain bearish as long as the index stays below this zone, according to the analyst.

Also read:Why is market falling today?

(With inputs from agencies)

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)