Indian mutual funds are deploying an unprecedented cash pile to erect a defensive wall against historic selling by foreign institutional investors (FIIs), pumping approximately Rs 1.07 lakh crore into just 20 powerhouse stocks during the first four months of calendar year 2026.Data from active mutual fund schemes reveals that domestic money managers are boldly defying global market volatility and geopolitical overhangs by anchoring their portfolios heavily in large-cap private lenders and selective IT heavyweights, using the recent market corrections to scoop up institutional favorites at attractive valuations.ICICI Bank alone absorbed ₹19,253 crore of fresh mutual fund buying in the January-April period, with fund managers raising their holdings from 98.49 crore shares to 113.27 crore, shows data compiled by Elara Securities.HDFC Bank drew ₹15,038 crore, the second-largest allocation, while Bharti Airtel attracted ₹8,890 crore. Together, the top three buys account for nearly ₹43,000 crore, or roughly 40% of the total deployment in the top 20 names."Large caps have continued to act as a stabilising anchor amid volatility, while mid and small caps have seen sharper corrections and stronger rebounds. Valuations in large caps are now below long-term averages after the recent correction," said Sorbh Gupta, Head of Equity at Bajaj Finserv AMC.Also Read |FIIs slash allocation in India's top 10 bluechip stocks by halfThe Contra Bet on ITPerhaps the most striking element of the buying spree is fund managers' decisive move into IT, a sector where institutional sentiment has soured sharply on fears of AI-driven revenue erosion.Infosys drew ₹6,397 crore in net purchases, with fund holdings rising from 45.36 crore shares to 49.93 crore. TCS attracted ₹2,373 crore. HCL Tech saw an additional ₹1,815 crore flow in. These are explicit contra calls, made against the grain of dominant market sentiment.JP Morgan has flagged the sector's fragility bluntly by saying that the earnings cycle "highlights ongoing challenges, including uncertain demand in key markets due to rising geopolitical risks, increasing pricing pressures, and AI-driven structural changes," with an unclear outlook for FY27. The global bank lists IT among its underweight sectors.Nifty IT index has underperformed 13% versus Nifty50 so far in 2026 with JM Financial saying that sector re-rating is tough in the near term until concerns about AI deflation persist. Slower-than-expected FY27 growth does not help improve investor sentiment. Bajaj Finserv AMC said it remains "underweight on IT services due to potential AI-led revenue deflation risks."Yet Quantum Mutual Fund sees value forming. "Deal wins continue to be strong. We find valuations in this pocket reasonable and remain optimistic on recovery," the fund house said, even while acknowledging that "forward guidance has moderated owing to continued macro uncertainty and pricing pressures."JM Financial prefers stocks with growth visibility, singling out Infosys among the top six.Also Read | Why 10 stocks suffered massive Rs 17,000 crore mutual fund selloff in AprilBanks: The Core ConvictionBeyond IT, the financial sector dominates the buying list. Kotak Bank received ₹6,808 crore, IndusInd Bank ₹3,946 crore, and Shriram Finance ₹3,678 crore. The aggregate bet on private financials is the single largest sectoral allocation in the period.Fund managers appear to be reading the same signals. JP Morgan noted that in the fourth quarter, large private banks showed "more evidence of NIM stabilization and loan growth acceleration", a turning point for a sector that had been buffeted by margin compression."Most banks reported a pickup in credit demand driven by SME and corporate books. Margin has stabilised as the bulk of the loan book repricing is in numbers. Asset quality continues to be benign," Quantum Mutual Fund said, adding that it "largely remains positive on this pack, given improvement in growth and undemanding valuations."Bajaj Finserv AMC confirmed the structural preference, saying it continues to favour domestic consumption and financials.JP Morgan has listed ICICI Bank, SBI, Axis Bank, AU Bank, Bajaj Finance, HDFC AMC, Max Financial, and SBI Life among its overweight financials.New Economy Names Enter the FrameBeyond the traditional heavyweights, fund managers have been building positions in a clutch of new-economy and consumption names. Eternal, formerly Zomato, drew ₹8,119 crore, making it the fourth-largest buy of the year. Swiggy attracted ₹2,009 crore. One97 Communications (Paytm) received ₹1,848 crore. PB Fintech saw ₹4,493 crore in buying.InterGlobe Aviation (IndiGo) attracted ₹5,185 crore, while Max Healthcare drew ₹4,353 crore, consistent with JP Morgan's overweight call on hospitals, including Apollo Hospitals, Max Healthcare, and Medanta.Vishal Mega Mart (₹3,009 crore), Biocon (₹2,975 crore), BHEL (₹2,329 crore), HDFC Life Insurance (₹1,977 crore), and United Spirits (₹1,965 crore) round out a buying list that spans healthcare, defence manufacturing, and consumer staples.What They're SellingOn the other side of the ledger, Jio Financial Services saw the steepest selling of ₹3,904 crore with fund holdings falling from 155.14 crore shares to just 10.91 crore. Wipro shed ₹3,453 crore, Hindalco ₹3,202 crore, and GE Vernova ₹3,437 crore.SBI, despite being an overweight pick for JP Morgan on the buy side, saw ₹1,767 crore in net selling across active schemes, suggesting divergence within the fund management community. Reliance Industries (-₹1,597 crore), HDFC AMC (-₹1,518 crore), NTPC (-₹1,463 crore), IOCL (-₹1,469 crore), and BPCL (-₹1,346 crore) also featured among the top exits.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)