UBS flags bearish investor sentiment on India IT over AI risks; stocks down

Infosys

04/05/2026 08:56

** Investor sentiment on Indian IT service sector remains largely bearish, driven by concerns around AI-led revenue deflation and further valuation de-rating, UBS says

** Nifty IT .NIFTYIT trading 1% down on Monday vs Nifty 50's NSEI.NS 0.5% rise

** Valuations likely to remain under pressure until there is clearer evidence of business model evolution and sustainable AI-led growth, UBS adds

** FIIs broadly pessimistic and believe AI-driven deflation in legacy services will accelerate - brokerage

** However, domestic investors less pessimistic, believe AI-driven deflation to be partly or wholly offset by incremental volumes and expanded opportunity set, UBS says

** Infosys INFY.NS, HCLTech HCLT.NS, Persistent PERS.NS showing early signs of potentially emerging as relative outperformers through the cycle - UBS

** The three firms' shares down between 0.2% and 1.04% on Monday

** YTD, IT down 23% vs 7.8% decline in Nifty 50

 (Reporting by Aleef Jahan in Bengaluru)

 ((aleefjahan.cs@thomsonreuters.com))