Why mutual fund managers are betting on information technology stocks

Mutual fund managers have been raising their bets on the information technology (IT) stocks amid weakening of the rupee and market volatility. Since January, most leading fund houses have increased their weightage towards the sector, which derives a bulk of its revenues in dollars.  IT shares have been on a roll since last August, with the BSE IT index over 35 per cent. On a year to date basis, the BSE IT index is up 18 per cent even as the Sensex has gained 2.6 per cent. The latest round of outperformance of IT stocks comes after lackluster returns between 2014 and 2017 amid slowdown in revenue growth. However, with dollar gaining strengthen against most global currencies, IT stocks are seeing heightened interest of money managers.