Mutual funds have expressed their optimism towards the IT sector by purchasing shares in Infosys, despite concerns about the macroeconomic slowdown in the US and Europe. ICICI Prudential AMC bought shares in Cognizant Technology Solutions, Aditya Birla Sun Life AMC purchased Wipro, and Mirae Asset Management acquired shares in Coforge last month. The buying spree by mutual funds helped offset the selling by foreign investors, resulting in a 6% gain in the Nifty IT index in May. However, there are lingering risks of further earnings downgrades, as reflected in Accenture Plc’s weak earnings outlook. The firm cited challenging global macroenvironment, clients curbing discretionary spending, and reduced annual growth guidance for the second time. Jefferies India expressed caution for companies heavily dependent on North America, such as Infosys, HCL Technologies, Tech Mahindra, and LTIMindtree. Despite these concerns, some experts view the recent correction as an opportunity for bottom fishing in the IT sector. Quant investment firm Gulaq has turned overweight on the sector, stating that they are most bullish on IT stocks. With an overweight sector allocation, mutual funds are indicating their confidence in the IT sector’s future performance.
