Mutual Fund Exposure to IT Stocks Falls to Record Low in September 2026

Key Takeaways

• Indian mutual funds' exposure to information technology stocks declined to 5.3% of their equity assets under management in September 2026.
• The sector's portfolio weight fell from 7.6% at the end of December 2025 and 9.24% at the end of December 2024.
• The decline reflects lower aggregate exposure to IT companies, although individual mutual fund schemes continued to make different stock-level allocation decisions.

Mutual Funds Reduce IT Allocation to 5.3%

Indian mutual funds reduced their exposure to information technology stocks to a record low in September 2026, with the sector accounting for 5.3% of their equity assets under management (AUM).

The allocation stood at 7.6% at the end of December 2025 and 9.24% at the end of December 2024, according to data reported by The Economic Times on 19 October.

The latest figure represents a decline of 2.3 percentage points during the first nine months of 2026 and 3.94 percentage points from the December 2024 level.

The reduction indicates a change in how the mutual fund industry is allocating its equity portfolios across sectors.

Global Technology Spending and AI Concerns Influence Positioning

Indian IT companies derive a substantial portion of their revenue from overseas clients, particularly in the United States and Europe.

Changes in enterprise technology spending, discretionary project budgets and outsourcing demand can therefore influence the sector's business outlook.

The Economic Times reported that concerns surrounding artificial intelligence, weaker global client spending and subdued revenue growth prospects had weighed on fund managers' assessment of the sector.

Artificial intelligence has also introduced uncertainty around traditional IT services business models. As companies adopt automation and AI-based software solutions, investors are evaluating how those developments could affect established outsourcing and technology services businesses.

These concerns form part of the broader market context. They do not establish that any single factor caused the reduction in mutual fund holdings.

Exposure Falls Across the Industry, but Stock-Level Decisions Differ

The decline in aggregate sector weight does not mean every mutual fund reduced its investments in IT stocks.

Some schemes lowered exposure, while others increased investments in selected companies, including Infosys and Tata Consultancy Services.

A fund's sector allocation can change through purchases, sales and movements in the market value of existing holdings.

Consequently, a lower portfolio weight does not necessarily represent an equivalent amount of net selling.

The latest data measures IT stocks as a proportion of total equity AUM. It should not be interpreted as a percentage decline in the absolute value of the industry's IT holdings.

What the September Data Shows

The IT sector's declining weight over successive reporting periods demonstrates how its relative position within mutual fund equity portfolios has changed.

The movement also highlights the distinction between overall industry exposure and decisions taken by individual fund managers.

Sector-focused schemes, diversified equity funds and benchmark-tracking products may hold substantially different allocations because of their respective investment mandates.

The September figures provide a snapshot of mutual fund positioning at the end of the month. They do not establish how allocations will change in subsequent reporting periods.