Assets of passive funds tracking the Nifty IT index have risen 23 per cent over the past year despite a sharp correction, according to reports from Business Standard. The sharp rise in Nifty IT AUM despite the steep correction indicates strong flows into passive schemes. Calculations based on changes in fund assets and the Nifty IT index indicate net inflows of roughly ₹2,500 crore in the past year.
The bulk of the flows have likely gone into the Nippon India Nifty IT ETF, whose AUM, the highest in the category, has surged 47 per cent in one year to ₹3,521 crore, as reported by Business Standard. This significant outperformance highlights investor confidence in the sector's long-term prospects despite current challenges.
NBIS shares are up nearly 150% year-to-date, reflecting strong investor interest in AI infrastructure companies. The rally has been driven by the company's positioning in neocloud infrastructure and recent strategic developments. The stock has gained significant attention after securing large cloud contracts with Microsoft and Meta Platforms, as well as an equity investment from Nvidia. According to market analysis, the rally reflects positioning around AI infrastructure and neocloud exposure, with retail sentiment shifting to 'bullish' from 'neutral' on Stocktwits. Message volume for the ticker jumped 212% in the last 24 hours as the market pays increased attention to the company.
IT stocks have remained under pressure amid persistent uncertainty over the global technology spending outlook, according to Business Standard reports. The sector is also facing uncertainty over the impact of artificial intelligence on traditional IT services, with the outlook remaining muted based on revenue growth forecasts provided by domestic and global firms.
Active equity mutual fund scheme managers have been cautious about the sector, with the IT sector's weight in equity and hybrid MF portfolios at a multi-year low of 6.6 per cent at the end of May, according to a Motilal Oswal report cited by Business Standard. An analysis by Nuvama Alternative & Quantitative Research shows that diversified equity schemes of fund houses like SBI and Mirae Asset were even lower at 3.3 per cent and 5.9 per cent respectively.
