Mutual funds turned buyers in IT during April as FIIs rushed to exit

Mutual funds (MFs) emerged as net buyers in IT shares during April, even as foreign investors turned out to be the largest sellers amid heightened volatility in the sector driven by muted earnings and US growth concerns due to the tariff impact.

MFs invested over Rs 9,599 crore in IT stocks during the month, as per Primedatabase data, while FIIs offloaded more than Rs 15,000 crore worth of tech shares, NSDL data showed.

Funds disclose their monthly investments at the individual stock level, offering detailed insights into their portfolio movements. In contrast, NSDL data does not provide a stock-wise breakdown of investments by FIIs.

Among IT stocks, Infosys attracted the highest investment from MFs, with additional shares worth Rs 3,011 crore purchased in April. This was followed by Tata Consultancy Services and Coforge, which saw MF inflows of Rs 2,375 crore and Rs 1,432 crore, respectively.

Other notable investments by MFs included HCL Technologies, Persistent Systems, Mphasis, LTIMindtree, Hexaware Technologies, and Cyient, with purchases ranging between Rs 170 crore and Rs 960 crore.

On the sell side, MFs trimmed positions in Tech Mahindra by Rs 270 crore, along with reductions in Birlasoft and Zaggle Prepaid, where stakes worth over Rs 85 crore each were sold. Additional reductions were seen in Oracle Financial Services, Affle, Neweb Technologies, and Inventurus Knowledge Solutions.

Meanwhile, the financial sector witnessed substantial inflows from both MFs and FIIs. MFs invested over Rs 4,450 crore during the month, while FIIs recorded significantly higher investments, purchasing shares worth Rs 18,409 crore in the sector.

Within this segment, Kotak Mahindra Bank received the highest inflow from MFs at Rs 1,586 crore, followed by IDFC First Bank and HDFC Bank with Rs 1,150 crore and Rs 1,026 crore, respectively. Other institutions that saw increased MF holdings included Max Financial Services, Axis Bank, HDFC Life Insurance, RBL Bank, and Shriram Finance.

Conversely, MFs reduced exposure in telecom and fast-moving consumer goods (FMCG) sectors, selling stocks worth Rs 2,787 crore and Rs 2,211 crore, respectively. In contrast, FIIs turned buyers in these sectors, investing Rs 4,648 crore in telecom and Rs 2,917 crore in FMCG.

Among telecom stocks, Bharti Airtel faced the largest sell-off by MFs, with Rs 2,499 crore worth of shares offloaded, followed by Indus Towers (Rs 584 crore) and Bharti Hexacom (Rs 173 crore).

In the FMCG segment, the most significant reduction was seen in ITC, where MFs cut holdings worth Rs 2,779 crore. HUL and Marico also witnessed selling of Rs 596 crore and Rs 382 crore, respectively. Other FMCG names that saw MF exits included Nestlé India, Tata Consumer Products, United Spirits, and Avanti Feeds.