Amid a challenging environment for the IT sector, mutual funds (MFs) stepped up their investments, pumping in over ₹9,599 crore into IT stocks during April 2025, even as foreign institutional investors (FIIs) were busy pulling out.
While the tech industry has been under pressure due to muted earnings and concerns over US growth impacted by tariff uncertainties, domestic mutual funds saw an opportunity where foreign players saw risk. This divergence in outlook resulted in a major reshuffling of portfolios within the IT segment.
Infosys Leads the Pack with Massive MF Inflows
Among all IT companies, Infosys emerged as the top choice for mutual fund investments, attracting ₹3,011 crore worth of fresh capital in April alone. This strong inflow indicates a renewed confidence among domestic investors in the long-term potential of the company.
Following Infosys, Tata Consultancy Services (TCS) also witnessed robust inflows of ₹2,375 crore, reinforcing its status as a preferred blue-chip stock in the tech space. Another key beneficiary was Coforge, with ₹1,432 crore worth of MF investments flowing into the mid-cap IT firm.
FIIs Exit While MFs Enter
Interestingly, this bullish stance from MFs comes at a time when FIIs turned aggressive sellers, offloading over ₹15,000 crore worth of tech shares, according to NSDL data. The selling spree by FIIs is largely attributed to uncertainties in the global macro environment, especially in the US, which is a critical market for Indian IT companies.
This contrast paints a picture of how domestic and foreign investors are responding differently to the current market dynamics. While FIIs seem focused on short-term global risks, mutual funds appear to be taking a long-term view, using the correction in IT stocks as a buying opportunity.
Transparent Investment Disclosures by MFs
Mutual funds disclose their monthly investments at the stock level, allowing a clearer view of which companies are receiving capital and where fund managers are placing their bets. On the other hand, NSDL’s FII data is available only in aggregate form, without stock-wise specifics, limiting deeper analysis on individual FII movements.
Key Takeaway
The month of April saw a sharp contrast in investment strategies, with mutual funds turning net buyers of IT stocks despite sectoral volatility, while FIIs chose to exit. This move highlights the growing confidence of Indian fund managers in the resilience and long-term potential of the domestic tech sector.