When India sold IT, the giants held on

Summary: Indian IT fell 41 per cent in a year and a half. The average fund cut its IT holdings by 40 per cent. The biggest funds, the ones holding most of India's equity money, did something different.

Summary: Indian IT fell 41 per cent in a year and a half. The average fund cut its IT holdings by 40 per cent. The biggest funds, the ones holding most of India's equity money, did something different. Indian IT has spent a year and a half falling. The Nifty IT index lost 41.5 per cent between December 2024 and July 2026, with close to two-thirds of that drop coming in 2026 alone. Fund managers moved with the tide: across 177 diversified equity funds, the average fund’s IT holding shrank by about 40 per cent. But the biggest funds, the ones holding most of India’s equity money, behaved differently. What they did with it, and what it means for your portfolio, is worth understanding.  Why the market punished IT The market has cut nearly 40 per cent off what it will pay for a rupee of Indian IT profit. Nifty IT traded at almost 28 times earnings in mid-January 2026 and under 17 by early July, even as the sector’s earnings rose over those months. The fall was not a verdict on today’s profits but on tomorrow’s growth. The worry is AI. Indian IT runs on billable hours, the more people working on a client’s project, the more it earns. If AI tools let those clients do the same work with fewer of them, that revenue shrinks. It is a threat to future growth and whether it plays out is still contested. The latest number