New Delhi, Oct. 21 -- Indian IT stocks could see further gains in valuations if revenue growth expectations remain stable and concerns over global artificial intelligence (AI) spending do not increase, according to a report by brokerage firm Jefferies.

The brokerage said the recent rally in IT stocks has largely been driven by improved investor sentiment about the sector's long-term growth prospects, rather than an improvement in revenue or earnings estimates.

However, it cautioned that further gains in valuations of large IT companies could be limited unless the growth outlook improves.

"While the growth outlook for IT remains uncertain, with stocks pricing 2-4ppts lower growth vs. history, any lack of disappointment in growth expecta...