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

The value of IT stocks within Indian mutual funds’ portfolios hit a record low in September 2026, largely due to concerns about artificial intelligence affecting the industry and reduced spending from global clients. 

Decline in IT Stock Holdings 

As per The Economic Times report citing Prime Database, Indian mutual funds reduced their investments in IT stocks to 5.3% of their equity assets under management (AUM) by September 2026. This marks a decrease from 7.6% at the end of 2025 and from 9.24% at the close of 2024. The IT sector had its peak at 13.4% in 2021. 

The value of mutual funds' holdings in IT stocks declined to ₹2.97 lakh crore in September from ₹3.98 lakh crore in December 2025. Infosys and TCS were notably impacted, dropping in mutual funds' holdings rankings. 

Changes in Individual Stock Holdings 

Infosys, previously among the top 5 fund holdings in 2026, fell to 10th place by September 2026. Similarly, TCS, once ranked 10th in 2024, dropped to 18th.  

Mutual funds also decreased their holdings in Tech Mahindra by 45 lakh shares, lowering overall holdings from 19.42 crore to 18.97 crore shares.  

Conversely, shares of HCL Technologies saw an increase by 1.8 crore shares. 

Nifty IT Index and Market Reaction 

The Nifty IT index, weighed down by similar concerns, saw a decline of about 28% in 2026, compared to a 14% dip in the Nifty index. However, a subsequent rebound helped cut earlier losses as the index gained 11.7% in one week, marking its biggest weekly gain in 18 years. 

Read More: Swiggy, Patanjali Foods Among Top 5 Midcap Stocks with Highest Mutual Fund Buying in September, 2026! 

Stocks Affected and Fund Managers' Actions 

As per the report, Wipro experienced one of the largest declines in mutual fund ranks, tumbling to 316th place from 88th earlier in 2026. Despite these cuts, mutual fund managers did increase holdings in some stocks, adding 2.7 crore shares of Infosys and 61 lakh shares of TCS by September 2026. 

Conclusion 

The share of IT stocks in mutual funds' portfolios dropped to 5.3% by September 2026, influenced by AI disruption and spending concerns. The value of IT stock holdings decreased by 25% from December 2025, reflecting changes in market dynamics. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities or companies mentioned are only examples and not recommendations. This does not constitute a personal recommendation or investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.