Indian IT stocks are facing renewed pressure as the valuation premium they held over global benchmark Accenture continues to narrow.
The post-pandemic surge that drove Indian tech giants to trade at significant multiples above their US counterparts has evaporated, replaced by a fundamental reassessment of growth prospects.
The core issue is no longer just cyclical slowdown but structural disruption.
Generative AI is reshaping traditional IT service models, challenging the high-margin, labor-arbitrage strategies that underpinned the sector's previous valuation logic.
As clients increasingly adopt AI-driven automation, the demand for traditional outsourcing and application maintenance services is softening, casting doubt on the long-term earnings power of India's largest tech names.
This valuation reset is part of a broader deterioration in the growth outlook for the sector.