Rs 8,600 crore selloff! Infosys most sold stock by mutual funds in December. Time for a U-turn?

Mutual funds pared their exposure to Infosys in December, making the IT major the most sold stock for the month with estimated outflows of Rs 8,600 crore. With the company now delivering better-than-expected Q3 performance and raising its full-year growth guidance, the stock is back on investor radars as the outlook for the Nifty bluechip stock shows early signs of stabilisation.

According to Prime Database estimates, mutual funds sold Rs 8,624 crore worth of Infosys shares during the month, led by ICICI Prudential AMC, Aditya Birla Sun Life AMC and DSP. The selling followed a 14% decline in 2025, though Infosys has gained around 4% so far in 2026, reflecting a modest recovery in market confidence.

Infosys reported Q3 revenue of $5.1 billion, up 0.6% quarter-on-quarter in constant currency (CC) terms, beating Street estimates. Management also raised FY26 constant currency revenue growth guidance to 3–3.5%, from 2–3% earlier, a move that has improved visibility for the March quarter and strengthened expectations for FY27.

“This is an early indicator of our view that AI services spends will inflect in mid-2026,” Motilal Oswal said in a note, raising its target price to Rs 2,200 and maintaining a Buy rating. The brokerage now expects FY27 growth to accelerate to over 6% year-on-year in organic constant currency terms, a sharp improvement from the subdued pace of recent quarters.

Akshat Agarwal, analyst at Jefferies, echoed the optimism while tempering expectations. “Infosys’ higher growth guidance of 3.0-3.5% YoYcc seems to reflect the 3Q beat rather than a better 4Q, though management commentary was upbeat,” he said. Jefferies raised estimates by up to 1% and lifted its target to Rs 1,880 from Rs 1,800, expecting Infosys to deliver 7.5% recurring earnings-per-share compound annual growth over FY26-28. “Given attractive risk-reward, we maintain buy.”

Nomura has named Infosys its top pick in large-cap IT with a target price of Rs 1,800, while Nuvama bumped its target to Rs 1,900 from Rs 1,800, citing two consecutive quarters of strong deal wins and growth that provide “high growth visibility for coming quarters.”

“Infosys has delivered two consecutive quarters of solid deal-wins and growth, which provide high growth visibility for coming quarters,” Nuvama said. “We expect the recent deal momentum to drive growth in coming quarters, further aided by Gen AI reaching an inflection point and possibly improving macros.”Axis Securities struck a more cautious tone, describing the sequential growth trajectory as suggesting “a stable environment rather than an improving one,” but still recommended a buy rating with a target of Rs 1,820 based on 23 times December 2027 earnings.

Motilal Oswal argues the risk-reward has shifted decisively. “Inosys is well placed to benefit from enterprise-wide AI spending, given its discretionary-heavy mix,” the brokerage said. “At the current valuations, upside risks meaningfully outweigh downside risks.”

Management’s improved outlook provides critical visibility for investors trying to gauge whether large-cap IT has finally found a floor after months of uncertainty. The Q4 growth implied by the new guidance would represent a meaningful acceleration from recent quarters, potentially setting up a stronger exit rate heading into FY27.

(Disclaimer: The recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times.)