The Indian mutual fund industry has experienced a robust year so far, characterised by a record net inflow of Rs 4.76 lakh crore in the fiscal year 2025, more than doubling the previous year’s figures. This significant surge in inflows, despite global market volatility, has driven the equity assets under management (AUM) to grow by 26% year-on-year, reaching Rs 32.3 lakh crore. The industry’s overall AUM expanded by 23% year-on-year to Rs 65.7 trillion, marking a consistent growth trend over the past five years.
Contributions from Systematic Investment Plans (SIPs), a popular investment vehicle among retail investors, showed resilience even amid market fluctuations.
According to a report by Motilal Oswal, “March 2025 saw contributions of Rs 259.3 billion, a marginal dip MoM but up 34.5% YoY.” This increase underlines the growing investor confidence in disciplined, long-term investment strategies as a means to weather market uncertainties.
In the wake of these developments, fund managers have strategically shifted their portfolio allocations, emphasising defensive sectors such as Telecom and Healthcare. Healthcare, in particular, has become the fourth-largest holding by weight at 7.6%. Private Banks have also seen their portfolio weight climb to 18.4%, positioning them as the top allocation, while the weight of PSU Banks has declined to 2.8%. Meanwhile, sectors like Insurance, Real Estate, and Infrastructure remain dominant, accounting for a 61.5% share of domestic cyclicals.
Among the top 10 asset management companies (AMCs), Nippon India Mutual Fund led the growth in equity AUM with a month-on-month increase of 9.6%. Other top performers included Axis MF, Kotak Mahindra MF, DSP MF, and UTI MF, each showing significant growth over the month. This growth reflects a strategic realignment toward sectors with strong potential for future returns, a sentiment echoed across the investment community.
The shift in sector preferences is evident in the buying trends among Nifty50 stocks, with notable net purchases in Jio Financial, Tata Consumer, Eternal, and Bajaj Finserv.
According to the most recent edition of Motilal Oswal’s Fund Folio, mutual funds were buyers in the majority of Nifty 50, Nifty Midcap 100, and Nifty Smallcap 100 companies. Specifically, funds increased their holdings in Jio Financial Services by 6.1 crore shares, representing an 18 percent rise and bringing their total investment value to Rs 9,150 crore.
Tata Consumer Products followed suit, with mutual funds adding 1.03 crore shares, a 12.8 percent increase, raising the value of their stake to Rs 9,080 crore. Eternal (Zomato) also saw a significant increase in mutual fund holdings, with funds adding 16.5 crore shares, resulting in a 10.2 percent increase and a total value exceeding Rs 36,090 crore.
Conversely, Hindalco Industries experienced the most significant selling activity, as mutual funds reduced their holdings by 6.3 percent. The second highest level of selling occurred in Kotak Mahindra Bank, where MFs reduced their stake by 5.3 percent, and in JSW Steel, where the stake was reduced by 4.5 percent.
In the Nifty Midcap 100 sector, significant increases in month-on-month net buying were observed in Yes Bank (47.9%), Patanjali Foods (21.9%), HUDCO (55.6%), and IDFC First Bank (22.7%). Patanjali Foods and Hindustan Zinc also experienced an increase in buying, with mutual fund stakes rising by 21.9% and 18.7%, respectively. Conversely, selling activity was noted in Adani Total Gas (52.2%), India Renewables (23.2%), Ola Electric (14.7%), and Godrej Properties (12.5%).
The small-cap sector experienced increased activity, with notable changes in mutual fund shareholdings. IIFL Finance saw a significant 36.7% surge in mutual fund ownership, with funds holding 1.4 crore shares valued at Rs 460 crore, representing a 48.3% increase in value.
Similarly, Welspun Living saw a sharp 21.5% rise in shares held, with mutual fund ownership reaching 3.06 crore shares, leading to a 53.6% increase in value to Rs 410 crore. Castrol India also recorded a 13.5% increase in shareholding, with mutual fund holdings reaching 1.99 crore shares worth Rs 400 crore.
Additionally, mutual funds have increased their ownership in sectors like healthcare, consumer durables, and chemicals, where the investment is at least 1% higher than the BSE 200 benchmark. As fund managers continue to adjust their strategies, the focus remains on balancing long-term growth prospects with the immediate need to mitigate risks in the current economic climate.