Shares of domestic information technology companies bucked the muted market trend and rose in early trade on December 20, tracking cues from the world's biggest IT company--Accenture's better-than-expected quarterly revenue and guidance upgrade.

Drawing optimism from Accenture's upward revenue revision, Infosys and Wipro's American Depository Receipts (ADRs) on the NYSE jumped 2-3 percent overnight. Some of that optimism also seeped into today's trade, as shares of Tata Consultancy Services rose nearly 2 percent to emerge as the top gainer on the Nifty. Aside from that, shares of Mphasis, Persistent Systems, L&T Tech, and Coforge posted 0.3-1 percent gains, lifting the Nifty IT index 0.5 percent higher.

The world’s largest IT company reported first-quarter revenue of $17.7 billion, surpassing analysts’ estimates of $17.12 billion, as per data compiled by LSEG. The company attributed its robust quarterly performance to broad-based revenue growth across markets and industry groups. The operating margin for the quarter reached 16.7 percent, marking a 90 basis points year-on-year increase and a sequential rise of 167 bps.

Brokerage firm Jefferies applauded Accenture's strong Q1 revenue, driven by faster-than-expected ramp-up of large deals, seeing this as a positive signal for the IT sector. On the other hand, an uptick in financial services offers a positive read-through for Indian IT companies, with Jefferies favoring Infosys, TCS, and Coforge as their top picks.

Accenture's revised outlook anticipates full-year revenue growth to be within the range of 4 percent to 7 percent, compared to its earlier projection of 3 percent to 6 percent.

Nuvama also believes that Accenture’s guidance upgrade, stemming from faster deal execution, hinted at the positive prospects for Indian IT services, reinforcing a favourable stance on the sector.

On the other hand, Morgan Stanley feels that while Accenture's Q1 results and outlook should support sentiment toward Indian IT stocks, its management commentary indicated no significant changes in the demand environment or clarity on 2025 IT budgets. Jefferies also picked up on that point and highlighted that even Accenture's deal bookings remained soft, and discretionary IT spending continues to face pressure.

However, the brokerage also noted that despite an unchanged demand environment, Accenture's robust net hiring and declining utilization suggest improving revenue visibility.

Meanwhile, taking a rather cautious stance, CLSA stated that the weak order books for most Indian IT vendors over the past two quarters raise concerns about potential competition from Accenture and limited room for further guidance upgrades for Infosys and HCL.

While maintaining a cautiously optimistic stance, CLSA prefers Persistent Systems, Tech Mahindra, and Wipro but holds an 'underperform' call on LTIMindtree.