Mumbai: Investors cut exposure to information technology (IT) stocks on Monday as Accenture’s lower-than-expected revenue growth guidance and weak order flows dented sentiment. Analysts said although no major declines are expected, the outlook remains bleak.

Nifty IT fell 1.5% against the 0.6% dip in Nifty. All 10 stocks in the index closed lower. Oracle Financial Services fell 2.7%, while Infosys and HCL Technologies dropped 2.3% each. Tata Consultancy Services and Wipro shed 1.3% and 1.1%, respectively. LTI Mindtree and Tech Mahindra fell almost 1%.

“While Accenture reported decent results amid a weak macro environment, the reduction in bookings implies a subdued discretionary demand that dragged the IT stocks lower,” said Sushovon Nayak, research analyst, Anand Rathi Institutional Equities.

Accenture revised its revenue growth from 5-7% to 6-7% on a year-on-year basis after its third quarter results. The company’s results and guidance are closely watched by investors because they serve as a proxy for global IT spending trends.

“Accenture revised the lower end of the guidance instead of the upper end, which is not optimistic as this is typically done by the IT major at the end of the year,” said Dharmesh Kant, head of research, Cholamandalam Securities.

Based on the guidance, the growth is not expected to come back in the next 6-10 months at least, said Kant.The NSE IT index is up 4.7% in the past three months but is down 11.4% in 2025 so far amid uncertainty over the discretionary IT spending in the US. “Investors were anticipating the discretionary demand outlook to improve this year, however, this has been pushed further,” said Sumit Pokharna, vice-president, Kotak Securities. “While the second half of the year could see lower risks, it is typically a muted period for IT companies and no meaningful orders are expected.”Gen AI bookings witnessed good growth, but the momentum slowed significantly, which implies deceleration in Gen AI revenue growth in the next few quarters, he said.

The extent of interest rate cuts in the US will likely be a key trigger for IT stocks. “An interest rate cut by the US Fed could be a positive trigger for IT stocks but, investors are advised to remain watchful and only buy value-based plays,” said Pokharna. “Infosys, TCS and Tech Mahindra remain reasonably valued.”

Nayak said mid-cap IT companies that have higher BFSI exposure should deliver on growth and justify the valuations since the commentary was good for this vertical, while large-cap companies are mostly fairly valued with flattish growth prospects.