Mutual Funds Cut IT Exposure Sharply: Which Funds Are Still Investing in Technology Stocks?

Samco Flexi Cap Fund had ₹27.47 of every ₹100 invested in IT stocks in December 2024. By September 2026, that had fallen to ₹3.28. Yet over the same period, Parag Parikh Flexi Cap Fund increased the combined weight of its Indian IT core holdings from 6.10% to 9.39%.

Both funds faced the same difficult market for technology stocks. Their portfolios ended up telling very different stories.

That is the interesting part of the change in mutual funds' IT exposure. Some managers have substantially reduced their dependence on the sector. Others still hold selected businesses, and the label “IT” can conceal quite different investments.

For investors, understanding those differences is more useful than following a list of funds supposedly selling technology stocks. A lower sector allocation, by itself, does not tell you how many shares a manager sold, why the portfolio changed or whether the decision improved returns.

Why Have IT Stocks Been Under Pressure?

The Nifty IT index reached an intraday record of 45,995.80 on December 13, 2024. It closed at 32,422.50 on October 21, 2026. That leaves it approximately 29.51% below the earlier peak, calculated using those two levels.

But the latest picture includes a recovery. The index rose 2.88% on October 21, with TCS gaining 2.77% and Coforge and Persistent also advancing. September portfolio disclosures therefore describe positioning before that session, rather than how managers responded to the subsequent rally.

This creates two questions for fund managers. How much growth might AI take away from existing services, and how much new business could it create? Even managers who agree on those risks can disagree about the price worth paying for a particular company.

Which Mutual Funds Have Reduced Their IT Exposure?

The portfolio comparison shows substantial reductions in Samco Flexi Cap and Motilal Oswal Midcap Fund. Parag Parikh Flexi Cap provides a counterexample, with higher exposure to its Indian IT core holdings.

A percentage-point change measures the distance between two allocation percentages. Samco's move from 27.47% to 3.28% is therefore a reduction of 24.19 percentage points.

The scheme name matters here. Samco Flexi Cap Fund and Samco Multi Cap Fund are different schemes. The much larger reduction shown above belongs to the flexi-cap scheme, and should not be assigned to the multi-cap fund.

There is another useful qualification. December 2024 was the month of the Nifty IT peak. These figures do not establish that every fund's own IT allocation peaked that month, or that its manager started reducing exposure immediately afterwards.

A Falling Allocation Does Not Always Mean Selling

Consider a simplified ₹100 portfolio with ₹20 in IT shares and ₹80 elsewhere. If the IT shares fall 30% while everything else stays unchanged, the portfolio becomes worth ₹94, with ₹14 in IT. Its IT allocation falls to about 14.89%, despite the manager selling nothing.

Fresh subscriptions invested in other sectors can reduce the percentage further. Conversely, a manager can buy additional IT shares while the sector's weight still falls if the rest of the portfolio grows faster.

To establish net buying or selling, compare share quantities after adjusting for corporate actions. Allocation percentages describe the resulting portfolio. They are only one part of the evidence needed to explain the transactions behind it.

Which Funds Still Hold Meaningful IT Investments?

The more revealing comparison is often between the companies underneath the sector label. Three portfolios show why investors should look beyond a single IT percentage.

Parag Parikh Flexi Cap retains established Indian IT companies. Its September core portfolio included HCL Technologies at 3.96%, Infosys at 2.93% and TCS at 2.50%. Together they accounted for the 9.39% domestic figure in the table.

It also held overseas businesses, including Alphabet and Microsoft. Adding those two companies to the Indian trio produces approximately 16.16% using rounded disclosed weights. That wider grouping should not be treated as equivalent to exposure to Indian IT services alone.

Motilal Oswal Midcap retains a more concentrated software selection. Coforge represented 5.43% and Persistent Systems 4.43% in the AMC's September portfolio, together accounting for its 9.86% IT software allocation. Its disclosed investment approach emphasises business quality and growth.

UTI Flexi Cap Fund also holds selected technology businesses. Its September portfolio included Coforge at 3.77%, Persistent at 3.44% and LTM at 2.05%. The same disclosure showed an underweight position in Infosys relative to its benchmark, illustrating that confidence in selected technology companies need not extend equally to the large IT names.

These holdings establish where money remained invested. They do not, without further commentary, establish that the managers expected an imminent sector recovery.

Which IT Stocks Have Funds Reduced, Retained or Added?

Looking at individual holdings makes the changes more concrete. The following comparison uses disclosed portfolio weights rather than inferring share transactions from changing market values.

Samco Flexi Cap shows a sharper change in stock selection. Its December portfolio contained Persistent, Oracle Financial Services Software, Newgen Software and eClerx. Those names were absent from its September portfolio, which disclosed Infosys at 3.28%. This is evidence of a changed set of holdings, beyond the effect of falling prices on an unchanged basket.

How Have the Values of IT Holdings Changed?

The following comparison tracks changes in the reported market value of mutual fund holdings in three major IT companies.

The contrast with Tech Mahindra shows why “mutual funds are abandoning IT” is too broad. Equally, higher holding value cannot establish buying without the corresponding share-count comparison.

Why Are Fund Managers Taking Different Positions?

A manager is choosing individual businesses within a mandate, at particular valuations. The decision is rarely captured by whether the sector allocation went up or down.

Samco's December 2024 commentary said relative strength helped explain the prominence of IT software and other leading sectors in that portfolio. Motilal Oswal describes an approach centred on quality and growth. Those published descriptions help explain how their processes work, but do not provide a complete explanation for every subsequent trade.

The portfolio evidence supports three distinctions. First, retaining Coforge and Persistent is a different decision from maintaining a basket of the largest IT services companies. Second, a manager may accept weak near-term growth if the valuation appears attractive. Third, reducing a position can reflect better opportunities elsewhere, rather than a belief that the company has become uninvestable.

The latter two are possible explanations, not verified accounts of these managers' motives. The reviewed disclosures establish the portfolio changes more clearly than the reasoning behind each one.

There is also a difference between absolute and relative conviction. A fund can hold a sizeable investment in an IT company while owning less than its benchmark does. Another can have a smaller sector allocation but concentrate it in just two stocks, making company-specific outcomes particularly important.

Did Cutting IT Exposure Improve Fund Returns?

The available same-category comparison does not support a simple rule that the fund with less IT necessarily performed better. Both Samco Flexi Cap and Parag Parikh Flexi Cap use the Nifty 500 TRI as their benchmark.

Samco ended the period with much less IT exposure, yet its one-year return was weaker. That is a useful warning against judging a whole fund by one sector decision.

It does not prove that reducing IT hurt returns. The allocation comparison starts in December 2024, while the return period starts in September 2025. Trade timing, other holdings, cash, overseas investments and expenses also affected results. A reliable attribution would need the contribution of each position across the period, which these endpoint disclosures do not provide.

Investors can use mutual fund portfolio analytics to examine their investments' returns, allocation and benchmark performance. This can provide a broader picture than judging a scheme through one sector's performance alone.

What Should Existing Mutual Fund Investors Check?

Start with what changed inside your own scheme. If a sector weight falls sharply, check whether the same stocks remain, whether positions disappear and where the portfolio's largest new exposures sit. A lower IT allocation can reduce one source of concentration while increasing another.

Next, look across all your investments. In a hypothetical example, ₹5 lakh in a fund with 20% IT exposure and ₹5 lakh in another with 10% creates combined IT exposure of ₹1.5 lakh, or 15%. Adding a technology fund or direct IT shares increases that exposure further. Owning several schemes does not automatically diversify the underlying companies.

Understanding mutual fund portfolio overlap can help investors identify when multiple schemes hold the same stocks. Investors can also use a mutual fund portfolio scan to examine their combined sector exposure and stock concentration.

A high IT allocation deserves closer attention when the same businesses recur across funds, or when you also depend on the sector for employment income. Its significance depends on the size of that exposure within your overall finances, rather than an isolated percentage in one factsheet.

For the next monthly disclosures, focus on three questions.

1. Are share quantities changing, after allowing for splits and other corporate actions?
2. Is the manager replacing IT companies with other IT businesses, or moving into different sectors?
3. Is the resulting portfolio consistent with the fund's stated process and your intended role for that investment?

Avoid treating one month's sector allocation as sufficient reason to switch schemes. The evidence here shows different portfolios adapting differently, and a sharp allocation reduction did not automatically translate into superior overall returns.

The decision for an existing investor is whether the fund's evolving holdings, concentration and investment process still fit the reason they bought it. That is a more useful test than trying to copy a manager's sector move after it appears in a monthly disclosure.