From Infosys to TCS: How Mutual Funds’ Biggest IT Holdings Have Changed Since the Sector’s Peak

MUMBAI/BENGALURU: The Indian equity markets on Wednesday witnessed a historic surge in technology stocks, prompting a deep dive into the mutual fund it stock holdings shift that has redefined institutional portfolios since the sector’s previous valuation peak. As of October 21, 2026, global brokerage Jefferies has triggered a massive wave of ‘selective re-rating,’ pushing heavyweights like Infosys, TCS, and HCL Tech to intraday gains of up to 15%. This pivot comes at a time when domestic mutual funds are aggressively recalibrating their exposure, moving away from defensive stances toward growth-oriented AI and cloud infrastructure plays that are now dominating the enterprise landscape.

The Evolution of Mutual Fund Portfolios in the IT Space

Since the sector’s previous peak, the mutual fund it stock holdings shift has been characterized by a move from broad-based exposure to highly selective, performance-driven allocations. In 2022, many funds were over-leveraged in mid-cap stocks that struggled with margin pressures. However, by October 2026, the trend has reversed. Large-cap giants like Infosys and TCS have reclaimed their status as ‘anchor tenants’ in equity diversified funds. This shift is largely attributed to their superior ability to integrate Artificial Intelligence (AI) into core service offerings, a move that has attracted long-term institutional capital.

Also read: IndiGo Co-Founder Rakesh Gangwal Donates ₹400 Crore to IIT Kanpur for Futuristic Medical School, highlighting the growing synergy between tech leaders and educational infrastructure which indirectly fuels the talent pipeline for these IT giants.

“The selective re-rating we are seeing today is not just a relief rally; it is a fundamental acknowledgment that Indian IT has successfully navigated the AI transition phase.” — Akshat Verma, Senior Equity Analyst

• Portfolio Concentration: Top 5 IT funds have increased their concentration in the ‘Big Three’ (TCS, Infosys, HCLT) by 450 basis points.
• Mid-cap Rotation: Funds are rotating out of stagnant legacy players into high-growth specialized firms like Sagility and Coforge.
• Cash Reserves: Mutual funds had been sitting on 6% cash in IT themes, which was deployed aggressively in today’s opening session.

Comparative Stock Performance and Target Prices: Oct 21, 2026

The following table outlines the current market standing of major IT firms, their recent percentage gains, and the revised target prices issued by leading analysts during the Wednesday morning session.

Jefferies' Bullish Stance: Why the Re-rating is Happening Now

The primary catalyst for today’s 15% rally is the comprehensive report by Jefferies, which suggests that the ‘missed reversal’ in IT stocks is finally here. Analysts point toward a 50% re-rating potential for companies that have successfully pivoted to cloud-native architectures and sovereign AI deployments. The brokerage has particularly highlighted Coforge and L&T Technology Services (LTTS) as top picks for the next fiscal year, citing robust deal pipelines from the North American BFSI and healthcare sectors.

Contextually, the market sentiment is further bolstered by successful primary market entries. Also read: Tonbo Imaging IPO GMP Today: Listing Gain Expectations Soar as Subscription Opens Alongside Jio IPO, which demonstrates the high appetite for tech-driven investment opportunities in the current market cycle.

• Deal Wins: TCS and Infosys reported a combined TCV (Total Contract Value) of $12 billion in the last quarter alone.
• Margin Expansion: Utilization of AI-driven automation has led to a 150-200 bps improvement in operating margins across the board.
• Global Tailwinds: Easing interest rates in the US have prompted a revival in discretionary tech spending by Fortune 500 companies.

AI and Cloud Infrastructure: The New Growth Engines

The 2026 IT landscape is no longer about labor arbitrage; it is about intellectual property and AI infrastructure. Indian IT firms have transitioned into becoming strategic partners for global enterprises looking to build private LLMs (Large Language Models). This structural change is what is driving the mutual fund it stock holdings shift. Fund managers are now looking at ‘AI-readiness’ as a primary metric for stock selection, favoring firms with deep partnerships with NVIDIA, Microsoft, and Google Cloud. (Also read: IndiGo Co-Founder Rakesh Gangwal Donates ₹400 Crore to IIT Kanpur for Futuristic Medical School).

“We are moving from a 'wait and watch' mode to a 'buy on every dip' strategy as the digital transformation cycle enters its most lucrative phase.” — Investment Committee, Udaipur Mirror Financial Desk

Impact on Retail Investors and Thematic Funds

For retail investors in Udaipur and across India, the rally in IT stocks has resulted in a significant jump in the Net Asset Value (NAV) of technology-themed mutual funds. In a single day, several IT ETFs saw their volumes triple. The surge in stocks like Wipro and Tech Mahindra, which had been underperformers for much of 2025, suggests that the tide is lifting all boats, albeit with a preference for quality balance sheets.

• SIP Inflows: Systematic Investment Plans in sectoral funds have seen a 20% month-on-month increase.
• Valuation Comfort: Despite today’s rally, the Nifty IT index P/E ratio remains attractive compared to the broader Nifty 50.
• Dividend Yields: Large-cap IT remains a favorite for conservative investors due to consistent buybacks and high dividend payouts.

Future Outlook: What to Expect in Q3 FY27

Looking ahead to the remainder of the 2026-27 fiscal year, the trajectory for the IT sector appears decidedly upward. Market experts believe that the current mutual fund it stock holdings shift is only the beginning of a multi-year cycle. As enterprise adoption of AI matures from pilot projects to full-scale production, the revenue visibility for Indian service providers is expected to reach record levels. Investors are advised to monitor the upcoming quarterly earnings for cues on hiring trends and attrition rates, which have stabilized at 12-14%.

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