IT Stocks Plunge 6%: What It Means for Your Mutual Fund Portfolio

• IT stocks, including Infosys and TCS, saw a sharp decline, with the Nifty IT index falling over 6% in a single session, impacting retail investors' mutual fund portfolios.
• The selloff is attributed to fears that rapid AI advancements could disrupt traditional IT business models, coupled with already stretched valuations, rather than weak earnings.
• For investors with less than 10% tech exposure, experts advise staying invested, viewing it as a sectoral cycle and a long-term opportunity.
• If tech funds constitute 15-30% or more of equity allocation, experts recommend rebalancing to reduce concentration risk and diversify into flexi-cap or multi-asset funds.
• SIP investors should evaluate the relevance of their tech SIPs, especially if they exceed 20% of total SIP allocations, and lump-sum investors should avoid blind averaging, waiting for stability and clear signs of adaptation to AI.