Mutual Funds' IT Exposure Falls to Record Low of 5.3% in September

Key Takeaways:

• IT stocks represented 5.3% of mutual funds' equity AUM in September, down from 7.6% at the end of 2025 and 9.24% at the end of 2024. 
• The value of mutual fund IT holdings declined 25% to ₹2.97 lakh crore from ₹3.98 lakh crore in December 2025. 
• The lower sector weight does not reflect uniform selling, as funds increased their shareholdings in Infosys, TCS and HCL Technologies during the period. 

Information technology stocks accounted for a record-low share of Indian mutual funds' equity assets in September 2026 as falling sector valuations and changes in portfolio positioning reduced the industry's overall IT exposure. 

IT represented 5.3% of mutual fund equity assets under management in September, down sharply from 7.6% at the end of 2025 and 9.24% at the end of 2024. The sector's weight had been as high as 13.4% at the end of 2021. 

In value terms, mutual funds' IT holdings fell to ₹2.97 lakh crore in September from ₹3.98 lakh crore in December 2025, a decline of about 25%, according to Prime Database figures reported by The Economic Times. 

The fall in portfolio weight should not, however, be read as an equivalent reduction through stock sales. 

Shareholding data shows that mutual funds actually increased their holdings in several major IT companies even as the market value and portfolio weight of the sector declined. 

Mutual Funds held about 86 crore Infosys shares in September, compared with 83.4 crore in December 2025. Their TCS holdings increased to 20.64 crore shares from around 20 crore, while holdings in HCL Technologies rose to 26.4 crore shares from 24.6 crore. 

Selling was more visible in some other stocks. Mutual funds reduced their Tech Mahindra exposure to 18.97 crore shares from 19.42 crore. Wipro holdings fell more sharply, to 17.42 crore shares from 51.39 crore at the start of 2026. 

The declining sector weight has coincided with weak performance in technology shares during much of 2026. The Nifty IT index had fallen about 28% for the year through October 8, compared with a 14% fall in the Nifty, before subsequently staging a sharp weekly rebound. 

The combination of falling stock prices, lower valuations and selective portfolio changes has therefore reshaped the IT exposure of equity mutual funds. The September data shows the sector at its smallest portfolio weight on record even though individual fund managers have continued adding shares in selected large technology companies.