India, Sept. 4 -- The Indian Information Technology (IT) sector, once seen as a defensive play for investors, is grappling with a downward re-rating. Analysts point to a mix of factors such as slowing discretionary technology spending, US visa uncertainties, and the disruptive impact of artificial intelligence (AI) on traditional jobs as reasons why the sector has struggled to outperform the indices.

According to Emkay Research's report, the Nifty IT Index has underperformed the broader markets by 3.9 per cent in the last three months, and 15.5 per cent in the last six months. While a modest recovery was visible in the past month due to a weaker rupee, and expectations of interest rate cuts by the US Federal Reserve, the sector's medium-...