Poor growth outlook forces equity MFs to exit IT stocks

With growth prospects turning gloomy for the sector, equity mutual funds (MFs) are exiting stocks of tech companies. Fund houses have cut their exposure to the scrips of IT behemoths Infosys, Tata Consultancy Services (TCS) and HCL Technologies during September. Software companies constituted only 7.6% of the assets under management ( AUM) of equity MFs during the month, data with markets regulator SEBI showed. This is the lowest in nearly six years.

The exposure of fund houses to IT stocks has been on a steady decline since January when software firms accounted for 10.6% of their AUM. Equity MFs, however, continue to bet heavily on banks, especially in the private sector. They have increased their stakes in HDFC Bank, ICICI Bank, SBI and Kotak Mahindra Bank.

Fund houses offloaded about 31.74 lakh shares of Infosys in September, the most in quantity terms among blue-chip stocks. There has, however, been no change in the number of equity MF schemes owning the stock, which stands at 487 at the end of the month. Equity MFs have also trimmed their exposure in Wipro by offloading around 14.38 lakh shares between July and September.

Though fund houses sold only about 4.55 lakh shares of TCS in September, the number of equity MF schemes owning the stock has come down sharply in the month. A total of 241 schemes owned the TCS scrip in September compared to 272 in the previous month, data compiled by HDFC Securities showed.

Equity MFs offloaded nearly 3.48 lakh shares of HCL Technologies in September with the number of schemes owning the scrip coming down to 316 in the month compared to 331 in August.