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Informist, Friday, Jun 20, 2025

MUMBAI – Shares of India's information technology companies are likely to see muted gains next week as investors will continue to monitor updates related to US tariffs and the potential intervention of the US in the conflict between Iran and Israel. The quarterly earnings of US-based IT giant Accenture will also be in focus. The company Friday posted 8% growth in its March quarter revenue in dollar terms to $17.70 billion. The company's new bookings declined 6% to $19.7 billion and fell short of the $21.5 billion the market had expected, as per media reports.

It also guided for a revenue growth of 6-7% for 2024-25 (Sept-Aug), which is higher than the guidance by most Indian large-cap peers. Accenture's results are monitored by investors as they provide clues about Indian companies' performance in the current financial year.

There is a risk of a slowdown in the sector for some more years, which could put more pressure on these stocks, along with the possibility of no major growth in earnings in the coming quarters, an analyst tracking IT companies at a domestic broking firm said. The near-term outlook is not favour for the sector due to the current risks associated with US economic growth, their interest rates, and no meaningful recovery in discretionary spending, the analyst said. 

In its monetary policy outcome, the US Federal Reserve had said that inflation remains somewhat elevated, so is uncertainty about the economic outlook. Risks associated with the US economy will have a ripple effect on IT companies, as more than half of their revenue comes from US clients. 

The US Fed Wednesday retained the key interest rate at 4.25-4.50% for the fourth consecutive time, in line with market expectations. The Fed officials continued to guide for a 50-basis-point reduction in the federal funds target rate in 2025. The Fed's cautious comments were one of the reasons for the sell-off across global bourses Thursday, along with the aggravated geopolitical tension between Iran and Israel. 

The possibility of US intervention in Israel's conflict with Iran raised worries of a full-fledged war. US President Donald President had on Tuesday demanded an "unconditional surrender" by Iran, to which Iranian Supreme Leader Ali Khamenei responded that the country will "never surrender" and warned that any US intervention would lead to irreparable damage. Investors will continue to monitor developments about the possible intervention of the US in the war, as well as likely updates on tariffs. 

Recently, global broking firms CLSA and Morgan Stanley remained cautious on the Indian IT sector due to persisting macroeconomic uncertainty and weak discretionary spending and deal pipeline. Morgan Stanley had a more bearish view on the industry, with the broking firm expecting a prolonged slowdown in the sector for the next two years and suggesting any rally in these stocks to be considered as an opportunity to sell. 

Foreign portfolio investors continue to sell Indian IT stocks amid mounting worries about the US economy and inflation. They net sold IT stocks worth INR 17.13 billion shares in the first half of June, lower than the INR 27.25 billion net offloaded in the second half of May, according to data from the National Securities Depository. 

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Following are the resistance and support levels for the sector's key stocks for next week, as per calculations based on their prices on the National Stock Exchange:

End

Reported by Anjana Therese Antony
Edited by Saji George Titus

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