Month: August 2025

August Fortnight Review: DIIs and MFs Lead Record Buying Against FPI Exit Pressure

FPI Selling Intensifies in Financials & Technology – FPIs executed sharp exits from large-weight sectors, led by Financial Services (₹13,471 Cr) and Information Technology (₹6,380 Cr), reflecting global risk-off sentiment. Heavy selling also hit Oil & Gas (₹4,091 Cr) and Power (₹2,358 Cr), while moderate withdrawals were seen across Healthcare (₹2,095 Cr), Realty (₹1,211 Cr), FMCG (₹1,150 Cr) and Consumer Durables (₹1,133 Cr). The selling pattern underscores a move away from defensives and heavyweights, balancing selective accumulation in infrastructure-oriented themes.

FPI Buying Concentrated in Telecom & Infrastructure Plays – In the first half of August 2025, FPIs showed strong buying interest in select sectors, led by Telecommunication with ₹7,446 Cr inflows, making it the standout gainer. Infrastructure-linked sectors also attracted healthy investments with Construction Materials (₹1,690 Cr), Construction (₹1,378 Cr) and Capital Goods (₹1,132 Cr) drawing attention. Modest inflows were also seen in Metals & Mining (₹606 Cr), Chemicals (₹410 Cr) and Services (₹384 Cr), signaling FPI preference for growth-driven and cyclical opportunities.

FPI Equity Selling Surges Beyond July Levels – Foreign Portfolio Investors (FPIs) stepped up their equity sell-off in the first half of August 2025, recording a net outflow of ₹20,975 Cr—sharply higher than the ₹17,741 Cr withdrawn in July. This includes a secondary market sell-off of ₹23,554 Cr, partially offset by ₹2,579 Cr of investment in primary markets, reflecting selective interest in new listings. With this, net FPI equity outflows for calendar year 2025 have soared to ₹1.16 Lakh Cr, highlighting their sustained bearish stance on Indian equities so far this year.

For a comprehensive understanding and more insights, please go through our detailed report.

Equity MFs AUM Slips Despite Record MF Peak: The Mutual Fund industry’s net AUM climbed to a record ₹75.37 Lakh Cr in July, yet equity MFs net AUM eased 0.57% to ₹33.28 Lakh Cr from its fresh peak of ₹33.47 Lakh Cr in June. This setback came despite record inflows and all-time-high SIP contributions, as market corrections weighed on valuations.

Mutual Funds Rush to IPOs in July: Mutual funds showed strong primary-market appetite, investing in several high-profile IPOs. Major allocations went to Anthem Biosciences (67 schemes; 5.98%), HDB Financial Services (44; 3.89%), Aditya Infotech (23; 2.53%), Travel Food Services (21; 4.07%), NSDL (20; 2.48%), Indiqube Spaces (18; 5.67%), and M&B Engineering (14; 7.85%).

Mutual Funds Expand Portfolios with New Stock Additions: Stocks like State Bank of India, Swiggy, Gabriel India, Navin Fluorine, Glenmark Pharma, Mahindra & Mahindra, RBL Bank and Eternal were actively added as fresh investments by several equity mutual fund schemes in July, reflecting a growing appetite across banking & financials, consumer services, chemicals, healthcare and auto-related sectors.

Funds Restructure Portfolios with Targeted Exits: Many equity mutual fund schemes fully exited stocks like IEX, Indian Hotels, Axis Bank, United Spirits, Mankind Pharma, Info Edge, SBI Cards, Siemens Energy India, HAL, Reliance Industries, BSE, InterGlobe Aviation, Max Financial and Cipla, reflecting profit booking and portfolio reshuffling amid shifting market dynamics.

For a comprehensive understanding and more insights, please go through our detailed report.

Cash Holdings Rise Despite Aggressive Buying: Equity mutual funds increased cash reserves to ₹2.07 lakh crore in July 2025, up from ₹2.04 lakh crore in June, even as they bought equities worth ₹47,019 crore in July. The rise was aided by record inflows and a drop in equity valuations during the market correction.

AMC Cash Ratios Breach 5% Mark: The average cash holding ratio among the top 20 AMCs climbed to 5.94% in July from 4.88% in June, decisively crossing the 5% level. This reflects a cautious stance, with fund managers prioritising liquidity over full equity deployment amid uncertain market conditions.

Cash-Heavy Mutual Funds: PPFAS Tops with 21.36%, SBI Holds ₹34,592 Cr –SBI Mutual Fund holds the largest cash pile at ₹34,592 crore (4.75% of AUM), followed by ICICI Prudential MF with ₹27,999 crore (5.98%). HDFC MF ranks close with ₹27,031 crore (6.43%), reflecting substantial liquidity positions among the biggest fund houses. PPFAS MF stands out with the highest cash-to-AUM ratio at 21.36% (₹25,375 crore), followed by Quant MF at 9.12% (₹7,978 crore) and Motilal Oswal MF at 8.61% (₹9,031 crore), signalling a notably cautious approach.

Parag Parikh & SBI Contra Lead in Cash Proportion: Parag Parikh Flexi Cap Fund tops with 21.66% of AUM in cash (₹24,532 crore), followed by SBI Contra Fund at 19.86% (₹9,325 crore) and Motilal Oswal Midcap Fund at 17.96% — signalling a strong liquidity stance to deploy capital when opportunities arise.

Contra & Flexi Cap Funds Lead the Cash Pile: Contra Funds hold the largest liquidity cushion in terms of percentage with 15.14% of AUM in cash (₹10,706 crore), followed by Flexi Cap Funds at 9.67% (₹47,698 crore). This indicates a defensive stance, keeping ample cash to capitalise on market corrections.

For a comprehensive understanding and more insights, please go through our detailed report.

The mutual fund industry’s average AUM hit a record ₹77 lakh crore in July, up 2.96% from June, driven by ₹1.79 lakh crore in net inflows and equity market gains.

Equity inflows surged 81% MoM to an all-time high of ₹42,708 crore, marking the 53rd straight month of gains. Sectoral/Thematic Funds led with ₹9,426 crore, boosted by seven new scheme launches.

Hybrid funds saw ₹20,879 crore in inflows, with Multi Asset Allocation Funds hitting an 18-month high of ₹6,197 crore and Arbitrage Funds attracting ₹7,295 crore amid volatile markets.

FoF (Domestic) inflows eased to ₹7,034 crore, while Other ETFs drew ₹4,477 crore.

Debt AUM rose 5.12% to ₹19.53 lakh crore, led by ₹44,573 crore in Money Market Fund inflows.

SIP inflows touched a record ₹28,464 crore, reflecting steady retail participation and long-term commitment.

For more details read through our comprehensive Mutual Fund Flow Report for July, 2025.

July Snapshot: FPIs Dump Equities Aggressively in Second Half; DIIs and MFs Provide Strong Support

July’s Sectoral Sell-Off: FPIs Slash Positions in IT & Financials

• Tech & Financials Bear the Brunt: FPIs executed an aggressive sell-off in Information Technology, dumping ₹19,901 Cr—with a sharp ₹14,422 Cr outflow in the second half alone. Financial Services also witnessed heavy selling, with ₹5,900 Cr of net outflows, reflecting risk aversion amid global headwinds and profit booking.
• Cyclical Sectors Under Pressure: Selling extended to Realty (₹3,933 Cr), Automobile & Auto Components (₹3,584 Cr), Oil & Gas (₹3,272 Cr), and Consumer Durables (₹2,614 Cr). Even Construction and Media saw steady exits, indicating a broad-based pullback from cyclical and rate-sensitive sectors in the face of macro uncertainties.

FPIs Bet on Domestic Demand and Defensive Plays in July

• Services, Consumption & Mining Lead Buys: Despite net equity outflows in July, FPIs selectively bought into domestic-facing sectors. Services (₹3,457 Cr), Metals & Mining (₹3,365 Cr) and Consumer Services (₹3,017 Cr) topped the buy list, reflecting a tilt toward consumption-led growth and earnings visibility. FMCG staged a sharp rebound, reversing a ₹1,428 Cr sell-off in the first half with a ₹2,986 Cr buy-in later, ending the month with ₹1,558 Cr inflows.
• Broader Defensive Buying Continues, But Capital Goods Wobbles: FPIs also favored Telecom (₹1,473 Cr), Chemicals (₹1,129 Cr) and Construction Materials (₹329 Cr). However, Capital Goods witnessed a shift in sentiment—turning from ₹922 Cr buying in the first half to ₹617 Cr selling in the second, ending with a tepid ₹305 Cr net inflow.

For a comprehensive understanding and more insights, please go through our detailed report.

July witnessed consolidation in the debt market following June’s repricing, with yields largely range-bound across the curve. Crude oil prices remained volatile but ended higher on supply concerns and geopolitical developments. Liquidity in the banking system stayed in surplus, though the RBI actively managed it through frequent VRRR operations. Meanwhile, the rupee weakened sharply amid renewed trade tensions and heavy FPI outflows, underperforming most regional peers despite a mid-month softening in the dollar index.

Money Market and Low Duration Funds continued to lead the sub-1-year space in July, delivering healthy 3-month annualised returns of 7.36%, supported by elevated short-term rates and stable accrual. Corporate Bond and Credit Risk Funds stood out in the short- to medium-term horizon, benefiting from spread compression and strong demand for high-quality credit.

The Indian rupee depreciated sharply, ending July near record lows due to renewed trade tensions, persistent FPI outflows, and a strengthening dollar. Despite RBI intervention, the rupee underperformed regional peers and remains on a cautious footing.

The attached snapshot captures all these key developments, along with category-wise mutual fund performance trends.

Click below to read the full snapshot attached.