Indian IT stocks are experiencing a significant rebound, as domestic fund managers are gradually increasing their investments and reducing their underweight positions in the sector.

Despite concerns about AI-driven disruptions and slower order wins, the Nifty IT index has emerged as one of the top-performing indices in the past month, three months, and year.

Currently, IT remains the second most underweight sector among domestic mutual funds, with a position of -0.9 percent relative to market capitalization and -1.7 percent of assets under management.

Only 30 percent of leading Asset Management Companies (AMCs) are currently overweight on IT, indicating potential for further buying activity by domestic funds.

Analysts are optimistic about the fundamental factors supporting this bullish trend, suggesting that the sector may see increased investment as fund managers reassess their strategies based on recent performance.