Valuations for the IT industry Morgan Stanley is not cheap, but it is also not in the sell zone:

The stretched valuations of TCS and Infosys, which are still 10-11% below their post-COVID peaks when growth rates were higher, are among the key causes for concern.

Since June, the Nifty IT index has climbed month after month, rising 12% in June, 13% in July, 5% in August, and 1.4% so far in September.

Morgan Stanley observes that investors are becoming increasingly wary of the IT industry's exaggerated valuations and stock positioning. In a note, the brokerage claimed that the current scenario is less favorable than it was a few months ago.
Values will remain stable as long as there is a revenue upgrade cycle, which Morgan Stanley anticipates will begin soon. Positively, the organization indicated that, while values are unquestionably not low, they are also not in the "sell zone."

The stretched valuations of TCS and Infosys, which are still 10-11% below their post-COVID peaks when growth rates were higher, are among the key sources of concern. Over the last three months, the industry has performed admirably, and investors are already well-positioned to benefit.

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