PPFAS Flexi Cap Fund Raises IT Exposure Amid Sector Selloff

PPFAS Mutual Fund’s flagship Flexi Cap Fund has increased allocations to information technology companies over the past three months through May, taking a contrarian view on a sector that has faced persistent pressure amid concerns over artificial intelligence and slowing outsourcing demand.

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The fund, which manages assets worth about $14.9 billion, has also deployed cash into financials, utilities and coal-related businesses, according to comments made by Chief Investment Officer for equities Rajeev Thakkar in an interview on June 11. Cash that was previously parked in debt and money-market instruments has gradually been shifted back into equities.

IT Stocks Added After Valuation Correction

The move comes at a time when technology stocks have witnessed a prolonged decline. The NSE Nifty IT Index, which includes companies such as Tata Consultancy Services and Infosys, is heading for its weakest annual performance since 2008. The index has fallen more than 27% so far this year, resulting in a significant moderation in valuations.

The sector currently trades at 15.7 times estimated 2026 earnings compared with 21.2 times a year earlier. Technology shares recovered on Monday after a sharp selloff triggered by a weak outlook issued by Accenture last week.

Thakkar said in the interview that concerns over AI eliminating the need for outsourcing appear excessive. He noted that while automation could reduce some software development tasks, IT service providers could benefit from improved efficiency and lower costs.

According to the latest factsheet, technology accounts for nearly 19% of the fund’s portfolio, with HCL Technologies and Infosys featuring among its top 10 holdings.

Debt Allocation Reduced

Data from the fund’s factsheet showed debt and money-market investments declined to 14.03% in May. Those holdings had risen to 23.77% in April 2025 from 11.85% in March last year when equity valuations were less attractive.

Core equity investments accounted for around 70% of the portfolio in May, compared with 67.3% a year ago.
Thakkar said the fund’s mandate is to remain invested in equities and excess money is parked in debt instruments only when valuations do not offer adequate opportunities.

Long-Term Performance Remains Strong

According to data from the Association of Mutual Funds in India, PPFAS Flexi Cap Fund ranks second among flexi-cap schemes over a 10-year period. While the fund has declined about 0.8% over the past year, it has delivered returns of nearly 17.8% over the last decade.

The portfolio adjustments come during a challenging phase for Indian equities. Official data showed foreign investors have withdrawn nearly $30 billion from domestic stocks as of June 18, even as fund managers continue to look for opportunities in businesses with steady cash generation and reasonable valuations.