Mutual Funds Cut IT Exposure By ₹4,810 Crore In May

Something shifted in mutual fund portfolios in May. Overall equity exposure climbed by ₹61,404 crore, taking total holdings to ₹52.3 lakh crore. Information technology was one of the few sectors to move in the opposite direction.

Fund managers pulled ₹4,810 crore out of IT stocks during the month, taking sector holdings to ₹3.13 lakh crore from ₹3.18 lakh crore in April. The sector's share of total mutual fund equity slipped from 6.16% to 5.99%. Fresh money was arriving, but it went elsewhere.

Why IT Got Cut

Accenture trimmed its full-year constant-currency revenue growth guidance from 3% to 5% to 3% to 4%, and cut its core commercial guidance from 4% to 6% to 4% to 5%. For Indian IT companies, that is not a distant signal. Accenture competes for the same global technology spending pipeline that Indian software exporters depend on.

Analysts flagged that the Middle East conflict could further weigh on Indian IT revenues in the first half of FY27. Artificial intelligence projects are picking up but the move from pilot to production has been gradual, and a meaningful sector recovery still hinges on the US economy stabilising.

Where The Money Went Instead

• Healthcare: Up ₹20,545 crore, share rising to 7.97%

• Industrials: Up ₹18,596 crore, share moving to 10.52%

• Consumer discretionary: Up ₹13,729 crore

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All three are linked to India's domestic demand rather than global technology budgets. That distinction is what is driving the rotation right now.

Despite cutting absolute holdings, mutual fund ownership as a share of IT sector market capitalisation edged up to 11.22% from 11.16%, pointing to IT stock prices falling faster than fund managers were selling.

Fast-moving consumer goods and energy also saw reductions of ₹7,794 crore and ₹9,130 crore respectively.

Source:

The New Indian Express