Mutual funds reduce investments in IT stocks in February, weight slips to 8 year low

Mutual funds have reduced their investments in the IT stocks, and the weight slipped to an eight-year low level, according to a report by Motilal Oswal Financial Services.

The investments on a monthly basis have gone down by 140 basis points from 8.3% in January to 6.9% in February, whereas on a yearly basis, the investment has gone down by nearly 260 basis points from 9.5% in February 2025, the report further showed.

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The report further highlighted that in February, sectors such as Technology, Consumer, Telecom, E-Commerce, and Chemicals saw a MoM moderation in weights. The technology sector was the one to witness the maximum reduction in value as it saw a decline of 16.1% on a monthly basis.

The stocks that witnessed the maximum MoM decline in value were Infosys, TCS, HDFC Bank, Tech Mahindra, HCL Tech, Coforge, Persistent Systems, Bharti Airtel, Eternal, and Wipro.

Infosys saw a decline in value by 16.6%, and 11 funds added the stock, whereas nine sold out of their portfolio. TCS saw a decline in value by 13.9% and 11 funds added the stock to their portfolio, whereas nine sold out the same from their portfolio.

HCL Technologies saw a decline in value by 13.3%, and 12 funds added this stock to their portfolio, whereas eight sold out this stock in February. Wipro saw a decline in value by 7.2% and 11 funds added the stock in their portfolio, whereas nine sold out the same from their portfolio.BSE 200 had a total allocation of 7.5% in the technology sector against 6.9% by mutual funds. Some fund houses, such as Aditya Birla Sun Life Mutual Fund, Franklin Templeton Mutual Fund, ICICI Prudential Mutual Fund, Motilal Oswal Mutual Fund, PPFAS Mutual Fund, Tata Mutual Fund, and UTI Mutual Fund, had more allocation compared to the BSE 200.

The report further highlighted that the technology sector remained among the top 10 sectoral allocations of most of the fund houses. In February, PPFAS Mutual Fund added 20.68 lakh shares of TCS.

According to the monthly portfolio, significantly increasing stakes in HCL Technologies, Infosys, and Tata Consultancy Services (TCS). PPFAS added 4.3 million shares of HCL Tech, 4.2 million shares of Infosys, and 1.9 million shares of TCS as the sector recorded a brutal 20% monthly crash, its steepest fall in nearly two decades

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Foreign institutional investors sharply reduced their exposure to IT stocks in February, selling shares in two phases. They offloaded around Rs 11,000 crore worth of IT stocks in the first half of the month and another Rs 5,993 crore between February 15 and 28, according to data from NSDL.

Jefferies downgraded multiple stocks, including Infosys, HCL Tech and Mphasis to Hold, and TCS, LTIMindtree and Hexaware to Underperform, slashing price targets by up to 33%.

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