Infosys declines after weak guidance from Accenture

Infosys declines after weak guidance from Accenture

IT major Infosys Technologies declined during trading session after US technology major Accenture issued weak guidance. Accenture reported five percent growth in revenue for year-on-year basis. The company reduced its future guidance by 100 basis points. Infosys Technologies declined as market participants believe that Indian IT sector could face tough times for next quarters.

The outsourcing sector is facing decline in new orders and imminent recession in the US market could be blamed for companies reducing expenses. Major technology companies in the US have reduced employee count over the last few months, citing tough business environment. Some of the big technology companies had been on a hiring spree after COVID-19 pandemic led to stronger demand for technology products and services. In the recent quarters, growth has declined and many companies have also seen decline in their market valuations.

Infosys Technologies has also witnessed decline in stock valuations. Infosys has been consistent performer in the Indian IT space. The stock has rewarded long term investors with exceptional growth. However, Infosys and some other technology companies have not participated in the recent rally in the stock markets. While Indian indices are trading around their all-time highs, Infosys and some other technology stocks are lagging behind.

In a research report, brokerage firm Motilal Oswal Financial Services said, " The recent exit of two senior executives, Narsimha Mannepalli and Vishal Salvi, from Infosys has the potential to revive investor concerns regarding an uptick in leadership attrition following the exits of co-presidents Ravi Kumar and Mohit Joshi over the past three quarters."

In its research report, Motilal Oswal is still bullish on Infosys stock for long term. In short term, the company could face pressure in stock markets, especially if Infosys issues weak guidance.