Quant Mutual Fund has significantly altered its sector allocation strategy, increasing exposure to IT services while maintaining a cautious stance on manufacturing companies. According to the fund house's September 2026 factsheet, this strategic shift comes amid global market uncertainty and geopolitical tensions that have kept equity indices largely flat through August 2026. The fund noted that while global markets remained resilient despite heightened tensions in West Asia and concerns around global growth and interest rates, India's Nifty 50 Index corrected 1.2% during the same period, while broader markets posted marginal gains. The fund house highlighted that global equity indices traded largely flat through August 2026, with precious metals and cryptocurrencies standing out as Bitcoin, Silver and Gold gained 25%, 15% and 10% respectively during August 2026.
The fund house's underweight position on manufacturing companies stems from input cost and supply chain uncertainties. As reported by Mint, Quant MF cited concerns about higher raw-material costs potentially pressuring profit margins and supply-chain disruptions affecting production timelines. This cautious approach reflects broader market concerns about manufacturing sector vulnerabilities in the current economic environment. The fund house stated that "We are relatively underweight on manufacturing companies because of uncertainty related to input costs and supply chains" - highlighting two key risks for investors to monitor in manufacturing companies.
Quant MF has increased exposure to IT services companies as they entered neglected territory. According to the fund house's analysis, the tech sector continues to drive its own agenda despite geopolitical uncertainty and rising global debt. The fund highlighted that the world's primary Hyperscalers—Amazon, Alphabet, Meta, and Microsoft—collectively spent over $1 trillion on AI infrastructure since 2023, with their combined global investments in capex projected to exceed $1 trillion annually between 2026 and 2027. Since April 2026, AI has dominated market conversations, with Quant believing India's relatively lower exposure to the crowded AI trade could support performance. The fund house noted that "the tech world continues to drive its own agenda" and that "since April 2026, the noise about how AI is the biggest thing has been surrounding us from all directions".
Beyond IT services, Quant MF remains constructive on multiple sectors including energy, large infrastructure, select NBFCs, asset management companies, auto ancillaries, hotels, pharmaceuticals, telecom, and data centres. The fund house noted that India's lack of exposure to AI and dependence on high-ticket imports such as oil and gold have weighed on broader market sentiment, but emphasized that "the upcoming decade belongs to India" and global capital will continue viewing the country as a favourable destination. Recent Q1 FY27 earnings showed healthy corporate growth with profit growth of 14% for Nifty, 27% for Nifty Next 50, and 38% for Nifty Midcap indices excluding oil marketing companies. The latest earnings season also pointed to healthy corporate profitability across market segments.
Looking ahead, Quant MF expects consolidation to deepen across large-cap and blue-chip stocks, with alpha increasingly coming from bottom-up stock-specific opportunities in micro-, small- and mid-cap segments. The fund house's portfolio strategy focuses on under-owned, under-researched, under-valued, and neglected territory stocks. According to the report, investors should look beyond popular themes and consider opportunities in sectors that may be overlooked by broader market participants. The key takeaway for investors is not to chase these sectors, but to understand where fund managers see risks and opportunities, as highlighted by the fund house's strategic positioning in IT services while remaining cautious on manufacturing.
