Month: February 2026

February Fortnight Review: FPIs Turn Buyers, DII Buying Slows to a 10-month Low, MFs Pause with Net Equity Selling

FPI Buying: Clear Pivot Toward Cyclicals & Capex – On the buy side, FPIs made a strong rotational bet on the domestic capex cycle. Capital Goods (₹8,032 Cr) topped inflows, followed by sustained buying in Financial Services (₹6,175 Cr) and Oil, Gas & Consumable Fuels (₹4,678 Cr). Interest also stayed firm in Metals & Mining (₹3,279 Cr) and Power (₹3,272 Cr), while incremental additions in Construction (₹1,745 Cr), Services (₹1,286 Cr) and Consumer Services (₹1,066 Cr) reinforced the broader shift toward cyclical, growth-linked sectors.

FPI Selling: IT Takes the Biggest Hit – FPIs turned aggressive sellers in Information Technology (₹10,956 Cr)—the dominant outflow for the fortnight, signalling a sharp de-risking from the tech pocket. Outside IT, selling remained relatively contained and selective, led by FMCG (₹1,182 Cr) and Healthcare (₹1,051 Cr). Mild profit booking was seen in Consumer Durables (₹434 Cr), while flows were largely negligible in Telecommunication (₹106 Cr), Textiles (₹67 Cr), Utilities (₹14 Cr) and Diversified (₹2 Cr).

FPIs Back in Buy Mode: FPIs shifted gears in 1st–15th Feb 2026, turning net buyers in equities at ₹19,675 Cr—their first net-buying since October 2025, indicating a clear improvement in risk appetite. Notably, the bulk of this buying came from the secondary market (₹18,130 Cr), while primary market/IPO investments contributed ₹1,545 Cr, highlighting that FPI participation was led by on-market accumulation rather than just new issuances.

DIIs Buying Moderates to the Lowest Since April 2025 – Domestic Institutional Investors (DIIs) continued to support equities during 1st–15th Feb 2026, with net buying of ₹9,776 Cr. However, the pace of buying moderated sharply, marking the lowest fortnightly DII inflow since April 2025, even as domestic flows remained positive and helped cushion the market amid shifting foreign and mutual fund activity.

Mutual Funds Turn Net Sellers in Feb; First Equity Sell Since Apr’25 – Mutual Funds (MFs) turned net sellers in equities during 1st–15th Feb 2026, with outflows of ₹603 Cr—their first fortnightly equity-selling in CY2026 and the first such instance since April 2025. However, on a CY2026-to-date basis (1st Jan–15th Feb), MFs still remain net buyers of ₹41,751 Cr in equities, indicating overall participation remains supportive despite the brief pause.

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

Equity MFs AUM Cools Off in January Even as Industry AUM Expands: Equity mutual funds’ Net AUM eased to ₹34.87 lakh crore in January from a record ₹35.73 lakh crore in December, a 2.40% MoM dip as the CY26 opening market correction weighed on portfolio values. In contrast, overall mutual fund industry Net AUM rose 0.97% MoM to ₹81.01 lakh crore (vs ₹80.23 lakh crore in December), signalling that despite softer equity valuations, a broader asset mix and sustained inflows kept the headline industry AUM on an upward track.

Mutual Funds Show Strong Appetite for January IPO Additions; Amagi and Shadowfax Lead Fresh Exposure: Equity mutual funds built meaningful new positions in the month’s IPO/new-age additions led by Amagi Media Labs (30 schemes; 12.32% holding bought) and Shadowfax Technologies (17; 7.80%), highlighting strong scheme-level conviction in scalable, new-economy listings.

Mutual Funds Add Fresh Picks Across Financials, Metals and Select Cyclicals: Beyond IPOs, funds added exposure across core franchises and cyclicals —Biocon, Tata Steel, Axis Bank, IndusInd Bank and NTPC, indicating preference for large financials, metals and select industrial/cyclical plays. Incremental additions were also visible in Oil India, Shriram Finance, State Bank of India, UltraTech Cement and HDFC Bank, pointing to diversified buying with selective size built in a few names.

Mutual Funds Execute Complete Exits in Select Names Amid Portfolio Realignment: On the exit side, schemes fully exited a set of names including Dixon Technologies, LG Electronics India, ITC and Cipla, suggesting churn, profit-taking and consolidation in select high-traded positions. Additional exits were seen in Cummins India, Tech Mahindra, HDFC Asset Management Company, HCL Technologies, Tata Capital, United Spirits, Polycab India, LTIMindtree, ICICI Prudential Life Insurance Company and Honeywell Automation India, indicating a portfolio realignment across consumer, industrials and IT exposures.

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

Mutual Funds Step Up Equity Buying; Cash Buffer Holds, Ratio Dips: Mutual funds remained strong net buyers of equities in January, stepping up deployment to ₹42,355 Cr as market corrections created fresh buying opportunities. Cash holdings stayed largely stable but edged down to ₹2.06 lakh Cr from ₹2.08 lakh Cr in December, indicating active deployment. As a result, the cash-to-equity AUM ratio declined—signalling higher equity participation, supported by record SIP contributions.

AMC Cash Levels Inch Lower; Industry Stays Firmly Invested: The average cash holding ratio across the top 20 AMCs eased to 3.78% in January, marginally lower than 3.83% in December, driven by higher equity deployment. With cash buffers still comfortably below the 5% mark, the trend reflects a risk-on stance, strong investor confidence and fund managers’ preference to remain largely invested amid choppy but resilient market conditions.

PPFAS Mutual Fund holds the highest cash-to-AUM ratio at 19.88% (₹27,773 Cr), reflecting a distinctly defensive stance with significant deployment flexibility. Quant MF follows with an elevated 16.75% (₹13,126 Cr), while Motilal Oswal MF (8.59%) and Axis MF (7.57%) also maintain relatively higher cash allocations, signalling a cautious yet opportunistic approach.

Flexi Cap Funds Lead in Cash Intensity: Motilal Oswal Flexi Cap Fund tops the list with the highest cash-to-AUM at 25.54% (₹3,366 Cr), signalling a strongly defensive yet opportunity-ready stance. Parag Parikh Flexi Cap Fund follows with a sizeable 20.17% cash holding (₹27,023 Cr), while HDFC Flexi Cap Fund also stays elevated at 17.88% (₹17,422 Cr)—highlighting meaningful dry powder for future deployment.

Contra & Flexi Cap Funds Dominate Cash Holdings: Contra Funds sit at the top of the liquidity stack with a 12.82% cash-to-AUM buffer (₹9,455 Cr), signalling a cautious yet opportunity-ready stance. Flexi Cap Funds follow with a meaningful 11.09% cash holding (₹60,735 Cr), reinforcing their ability to swiftly rotate across market segments as valuations and earnings visibility shift.

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

The mutual fund industry’s AAUM was broadly unchanged at ₹82.01 lakh crore in January versus ₹81.99 lakh crore in December. The strong ₹1.56 lakh crore net inflow was largely driven by debt schemes.

Equity-oriented fund inflows fell 14% month-on-month, marking the second straight month of moderation.

Flexi-cap funds remained the biggest contributor, garnering ₹7,672 crore, although lower than December’s ₹10,019 crore.

Within hybrids, Multi-Asset Allocation funds led with ₹10,486 crore of inflows, reflecting investors’ preference for diversified exposure across equity, debt and commodities.

Passive fund inflows jumped 50% in January 2026 versus December, led by strong allocations into Gold ETFs.

Debt funds’ average AUM declined 2.39% to ₹19.28 lakh crore in January 2026, even as net inflows rebounded sharply to ₹74,827 crore, primarily supported by Overnight and Liquid funds.

SIP inflows were steady at ₹31,002 crore in January 2026, in line with December.

For more details, read our January 2026 Mutual Fund Flow Report.

January 2026: FPIs Extend Equity Selling, but Add Debt; DIIs and MFs Absorb the Supply

January 2026 Sectoral Shifts: Second-Half Buying Spikes in Metals; Financials & Consumption Stay the Key Drag

Second-half rotation lifts cyclicals: FPI buying was heavily concentrated in Metals & Mining, totaling ₹11,526 Cr, with a sharp acceleration in the 16th–31st window (₹8,837 Cr vs ₹2,689 Cr in the first half). Capital Goods also saw stronger late-month participation at ₹2,761 Cr, driven largely by second-half buying (₹2,435 Cr), pointing to selective interest in cyclical/capex themes. Buying in Chemicals was marginal at ₹140 Cr, while Forest Materials stayed broadly flat (₹2 Cr).

Financials and Consumption Remain the Key Drag

• Selling remains broad-based, led by Financials and consumer-facing sectors: Financial Services recorded the deepest outflows at ₹8,592 Cr, with selling intensifying in the second half (₹5,402 Cr vs ₹3,190 Cr). FMCG selling totaled ₹7,497 Cr, but was front-loaded in the first half (₹6,128 Cr vs ₹1,369 Cr later). 
• Healthcare saw sharper second-half unwinding (₹6,162 Cr total; ₹5,113 Cr in 16th–31st), while Consumer Services (₹5,513 Cr) and Telecommunication (₹4,777 Cr) also faced heavier late-month exits. Automobile (₹3,594 Cr), Realty (₹2,655 Cr) and Services (₹1,971 Cr) stayed net sold, though Services selling moderated in the second half (₹384 Cr vs ₹1,587 Cr).

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