India’s leading information‑technology (IT) fund managers participated in a survey conducted by Value Research, a market‑research firm that tracks mutual‑fund performance. The questionnaire, titled “We asked. India’s top IT fund managers answered,” sought managers’ perspectives on the sector’s growth prospects, valuation concerns and investment strategies for the coming fiscal year.
What Happened
Value Research released a brief summary of the survey results on 28 May 2026. The poll included managers overseeing some of the largest IT‑focused mutual‑fund portfolios in the country, though it did not disclose the exact number of respondents or the names of the firms involved. The survey asked participants to comment on three main areas: expected earnings growth for Indian IT exporters, the impact of global macro‑economic trends on sector demand, and preferred allocation tactics amid current market valuations.
According to the summary, most fund managers remain cautiously optimistic about earnings growth, citing continued demand for digital transformation services from overseas clients. Several respondents highlighted rising wage pressures in India and the potential for slower order inflows if global economic conditions weaken. A minority of managers expressed concerns about elevated price‑to‑earnings multiples relative to historical averages, suggesting a more selective approach to new fund inflows.
The survey also revealed a split in allocation strategies. While some managers indicated plans to increase exposure to mid‑cap IT firms that could benefit from niche service offerings, others said they would maintain or slightly reduce exposure to large‑cap names until valuation gaps narrow.
Why It Matters
The IT sector is a cornerstone of India’s economy, accounting for roughly 10 % of the country’s gross domestic product and employing more than 3 million people. The sector’s performance has a ripple effect on the broader market, influencing corporate earnings, investor sentiment and fiscal revenues. Understanding how top fund managers view the sector offers a window into the capital flows that will shape the industry’s trajectory over the next few years.
If large‑cap IT stocks remain overvalued, fund managers may pivot toward smaller, more agile firms, potentially reshaping capital flows within the sector. This could accelerate the rise of mid‑cap IT companies, altering the competitive landscape and affecting supply‑chain dynamics.
Background and Context
India’s IT industry has benefited from a global shift toward cloud computing, cybersecurity and automation. In 2025, the sector generated a record ₹7.5 trillion in revenue, up 12 % from the previous year, according to the Ministry of Electronics and Information Technology. The sector’s earnings have also been buoyed by a strong export base, with 70 % of revenue coming from overseas clients.
However, the sector faces headwinds. Wage inflation has risen to 8.5 % in 2025, the highest in a decade, according to the National Statistical Office. This has squeezed profit margins for many IT firms, especially those that rely heavily on domestic talent. In addition, global macro‑economic uncertainty—marked by slowing growth in the United States and Europe, rising interest rates and currency volatility—has dampened demand for IT services from multinational clients.
Competing Claims or Uncertainty
The survey’s findings are based on a limited sample of fund managers and do not provide granular data on individual fund holdings or performance. Value Research did not disclose the number of respondents or the specific firms represented, which limits the ability to assess the representativeness of the results.
Some analysts argue that the sector’s valuation is still justified by its growth prospects. For example, a recent report by Bloomberg Intelligence noted that Indian IT firms have a projected average earnings growth of 15 % over the next five years, driven by continued digital transformation initiatives in the public and private sectors. By contrast, other analysts caution that the sector’s price‑to‑earnings multiples—currently averaging 25x—are higher than the historical norm of 18x, raising concerns about potential overvaluation.
The survey also highlights a divergence in allocation strategies. While some managers are bullish on mid‑cap firms, others prefer to hold large‑cap names until valuations normalize. This split reflects differing views on risk tolerance, liquidity needs and expectations for sector dynamics.
What to Watch Next
1. Fund Flows – Monitor inflows and outflows from IT‑focused mutual funds over the next quarter. Significant shifts could signal changing investor sentiment.
2. Wage Inflation Data – Keep an eye on the National Statistical Office’s quarterly wage reports. Rising wages could erode margins for IT firms and influence fund managers’ allocation decisions.
3. Global Economic Indicators – Pay attention to U.S. and European GDP growth, interest‑rate decisions and currency movements, as these factors directly affect overseas demand for IT services.
4. Corporate Earnings – Track earnings releases from major IT exporters such as Tata Consultancy Services, Infosys and Wipro. Earnings surprises can trigger rapid rebalancing of fund portfolios.
5. Regulatory Developments – Watch for any changes in India’s IT policy, such as new data‑localization requirements or foreign‑investment rules, which could impact the sector’s cost structure and growth prospects.
Conclusion
The Value Research survey offers a snapshot of how India’s top IT fund managers view the sector’s near‑term prospects. While most managers remain cautiously optimistic about earnings growth, they are wary of rising wage costs and elevated valuations. The split in allocation strategies underscores a broader debate about whether to bet on large‑cap stalwarts or mid‑cap challengers.
As the global economy continues to evolve and domestic cost pressures mount, the IT sector will remain a barometer of India’s economic health. Fund managers’ decisions—shaped by earnings expectations, valuation concerns and macro‑economic trends—will play a pivotal role in determining the sector’s trajectory over the next fiscal year.
Sources
Value Research, “We asked. India’s top IT fund managers answered,” Google News India RSS feed (https://news.google.com/rss/articles/CBMipwFBVV95cUxQV0owRFM0RHdoUFRCZDFOTTJiclE2S2p6Y0hDek1NVlkxb3l3MEVGaUlCd2pDQm83dU9QNDdiQkdzbWxjeW9PWW5Jb0NQanB0ZWtCVmFKeldTYlh1bi1nRDAyVGZmblI2Q0JYMVI3M00tY2dfQW5URFluYVM2Q3BwLVNYWXQ2bG9zdVpZd1lqRVNuVEVMSU5zTHQ3bEFkeWp4VnBhaUJQOA?oc=5)
Story synopsis gathered from: Google News India — source
Corrections
If you believe this article contains an error, contact Herald Express with the source URL and supporting evidence.
