Indian IT stocks have plunged sharply, eroding over Rs 50,000 crore from mutual fund portfolios in just weeks. With AI-driven disruption fears rattling investors, experts urge caution against blind averaging and recommend reviewing sector-heavy exposure. The selloff raises critical questions on portfolio resilience and long-term strategy.
Market Impact And Investor Concerns
The Indian IT sector has faced a brutal correction this February, with benchmark indices sliding under sustained pressure. Mutual funds, heavily invested in technology names, are now grappling with significant valuation losses. The rout has been triggered by mounting concerns that generative AI could disrupt traditional outsourcing models, reshaping the industry’s fundamentals.
Key Highlights:
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IT stocks wiped out nearly Rs 1.9 lakh crore in market capitalization within days, marking one of the steepest sectoral declines since 2008
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Mutual funds lost a notional Rs 50,000 crore in holdings across top IT companies like Infosys, TCS, and HCL Tech
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Funds such as PPFAS and ICICI Prudential hold over 10–25% exposure to IT stocks, amplifying the impact on retail investors
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Experts caution against averaging down IT-focused funds amid AI uncertainty, suggesting investors reassess sector concentration
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Domestic institutions provided some support, but global repricing of tech valuations points to prolonged volatility
What Should Investors Do?
Analysts emphasize that while IT remains a long-term growth story, the sector faces structural challenges from automation and AI. Investors are advised to diversify portfolios, avoid knee-jerk reactions, and focus on balanced asset allocation. Reviewing exposure to sector-heavy funds and considering staggered investments across broader themes may help mitigate risks.
Sources: Business Standard, Mint, AsianFin News, NextFin News