Accenture Shares Plunge Despite Revenue Beat; Indian IT Sector Sees Mixed Fortunes

In a surprising turn of events, global consulting and IT services giant Accenture (ACN) saw its shares plummet by a significant 11% on Friday, reaching a day's low of $273.19. This sharp decline occurred despite the company reporting better-than-expected revenue for its third quarter, driven by a growing appetite for its AI-driven services among enterprise clients. The contrasting market reaction highlights investor concerns lurking beneath the surface of seemingly positive earnings.

Accenture announced revenues of $17.7 billion for the quarter ending May 31st, surpassing analysts' average estimates of $17.30 billion, according to Reuters. However, the market's focus quickly shifted to the company's new bookings, which reportedly fell short of expectations, dampening investor sentiment. Furthermore, the company acknowledged facing a challenging U.S. federal contracting environment, as the Trump administration's efforts to curb federal spending have led to a slowdown in new contracts and cuts to existing agreements. While Accenture stated these changes have not had a "material impact" on its operations or financial condition, the market appears to be factoring in potential future headwinds.

The ripple effect of Accenture's performance was immediately evident across the technology sector, impacting American Depository Receipts (ADRs) of major Indian IT companies. Infosys ADRs, in particular, felt the heat, dropping 3% to hit day's lows of $17.89. Wipro ADRs, though less severely, also saw a marginal dip of 0.33%. This often happens as Accenture's results are considered a bellwether for the global IT services industry, influencing how investors perceive the broader outlook for the sector, including Indian IT firms that derive a significant portion of their revenue from international markets.

On Wall Street, major indices traded mixed following Accenture's earnings. The Dow 30 managed a modest gain, up 54.23 points (0.13%) to 42,225.90. However, the S&P 500 dipped 9.35 points (0.16%), and the tech-heavy Nasdaq Composite slid 82.13 points (0.42%) to 19,464.10 by late afternoon GMT-4.

In contrast to the turbulence in the US, India's headline indices showcased resilience on Friday, snapping a three-session losing streak. Led by strong performances in bank, energy, and certain IT stocks, the Nifty gained 319.15 points (1.29%) to close at 25,112.40. The S&P BSE Sensex also climbed significantly, finishing at 82,408.17, up by 1,046.30 points (1.29%). HDFC Bank and Reliance Industries (RIL) were key contributors to this domestic market rally.

Within the Indian IT sector, the picture was mixed. While Infosys (via its ADRs) faced pressure from the global cues, many Indian IT stocks actually ended the day with strong gains. Tier-2 IT companies particularly shone, with Persistent Systems jumping 3.5% and Coforge rallying 2%. Mphasis also closed up by over 1%. Among the large-cap IT players, HCL Technologies was the top gainer, rising 1.3%, while others like Oracle Financial Services Software (OFSS), Tech Mahindra, Tata Consultancy Services (TCS), and Wipro settled with gains of up to 0.8%. However, Infosys and LTIMindtree were among the few Indian IT stocks to close in the red on their domestic exchanges. Overall, the 10-stock Nifty IT index managed a decent uptick of 0.84%.

The divergence in performance between global IT giants and specific segments of the Indian IT market highlights the complex interplay of international sentiment, company-specific fundamentals, and domestic market dynamics.