PPFAS Mutual Fund, India's largest actively managed equity fund, is increasing its exposure to the country's information technology sector, betting that current valuations offer a compelling entry point despite widespread investor anxiety over artificial intelligence.
The fund is accumulating shares in beaten-down IT names as the Nifty IT index trades at 15.7 times 2026 estimated earnings, a significant compression from 21.2 times a year ago.
This valuation reset follows a sharp decline of over 27% for the index year-to-date, driven by fears that generative AI could disrupt traditional outsourcing models.
This valuation reset follows a sharp decline of over 27% for the index year-to-date, driven by fears that generative AI could disrupt traditional outsourcing models.
The move by PPFAS signals a shift in sentiment among some domestic institutional investors, who are beginning to view the sector's drawdown as an overreaction.
While global tech giants like Meta face their own capital-raising pressures and volatility, Indian IT firms are increasingly seen as defensive plays with resilient cash flows, according to recent market analysis.
The fund's contrarian stance highlights a growing divergence between short-term market sentiment and long-term structural demand for digital transformation services.