India's IT stocks gain as Accenture outlook lifts sector sentiment

Oct 5 : India's Nifty IT Index rose roughly 1.6 per cent on Monday after IT services firm Accenture forecast stronger-than-expected annual revenue growth, lifting sentiment toward the sector and easing concerns that AI-driven disruption could dent technology spending.

Accenture's results, often viewed as a bellwether for Indian IT companies, come as investors grapple with the implications of AI for the $315 billion sector.

While advances in AI have raised concerns that automation could disrupt the industry's labour-intensive business model, brokerages increasingly view enterprise-scale adoption of the technology as a major new growth opportunity as companies move beyond pilot projects and deploy AI across business functions.

Persistent Systems, Mphasis Limited, Wipro and Tata Consultancy Services were among the top gainers in the index on Monday, rising 3.1 per cent, 1.1 per cent, 2.1 per cent, and 2.1 per cent, respectively.

"For Indian IT services, elevated booking growth and continued revenue conversion, particularly in outsourcing, provide a positive read-through on enterprise IT spending," according to PL Capital analysts.

The Nifty IT index pared early gains and was up 0.4 per cent as of 10:34 a.m. IST.

Accenture's comments on an increase in smaller deals and improving conversion of deal wins into revenue were seen as positive for Indian IT firms, signalling healthier demand and stronger execution.

"The sector (Indian IT services) is positioned for a gradual growth improvement as technology budgets normalise, while AI creates a new multi-year spending opportunity," says analysts at Centrum Institutional Research.