The mutual fund investments in software stocks fell to Rs 16,557 crore in April, the lowest in four months, as heavyweight Infosys disappointed with its financial results and concerns related to the US immigration bill weighed down on the sector.
The April figure also marks the first monthly decline in mutual funds allocation to the software stocks since the beginning of calendar year 2013.
According to latest data available with the market regulator Sebi, mutual funds deployed 8.95 per cent of their total equity assets under management (AUM) of Rs 1.85 lakh crore in software sector in April.
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This was the lowest since December 2012, when equity funds had invested Rs 16,467 crore (7.98 per cent of total funds) in software sector.
In March, MFs held software stocks worth Rs 19,196 crore, which was 10.73 per cent of their total AUM. This was the highest level in 44 months.
Among other major sectors, pharmaceuticals' exposure was Rs 14,352 crore or 7.76 per cent of AUM, consumer non-durables Rs 13,183 crore (7.13 per cent), finance Rs 10,313 crore (5.57 per cent) and petroleum products Rs 9,637 crore (5.21 per cent).
Commenting on the declined in MFs investment in the software sector, ICICI Prudential AMC Fund Manager Mrinal Singh said," IT heavyweight Infosys with 42.25 per cent weightage on BSE IT index let down market expectations in its Q4FY13 result announced in April, resulting in a sharp drop in its share price (fell by about 20 per cent."
"Also lack in clarity of proposed immigration bill in US has kept investors at bay," Singh added.
Infosys reported a consolidated net profit of Rs 2,394 crore for the January-March quarter of 2012-13 fiscal and posted 18.09 per cent rise in revenues at Rs 10,454 crore.
The IT major pegged a revenue guidance of 6-10 per cent, which is lower than that of IT body Nasscom, which expects industry to grow by 12-14 percent in the current fiscal.
On the other hand, MFs rose their holding in banks to 20.84 per cent in April from 20.11 per cent in the previous month.
Besides, the mutual funds industry allocation to the banking stocks increased from Rs 35,967 crore in March to Rs 38,572 crore in April.
However, this was still way below the level seen in January, when mutual fund houses had invested Rs 42,760 crore (21.40 of the total funds) in the software sector.