Month: March 2026

March Fortnight Review: FPIs See Sharpest Selling Since Oct’24, DIIs Hit Record Buying, MFs Stay Strong Equity Buyers

FPIs Stay Selective on Capex Themes; Financials Bear the Brunt of March Fortnight Selling (1st–15th Mar 2026)

FPI Selling: Financial Services Sees Massive Unwind – On the sell side, Financial Services witnessed an overwhelming ₹31,831 Cr of outflows, making it by far the biggest drag during the fortnight and pointing to a sharp reduction in exposure to the market’s heaviest-weight sector. Selling was also pronounced in Automobile and Auto Components (₹4,807 Cr) and Telecommunication (₹3,856 Cr), followed by Construction (₹2,975 Cr), Oil & Gas (₹2,932 Cr), Healthcare (₹2,436 Cr), FMCG (₹2,403 Cr) and Realty (₹2,133 Cr). This suggests that overall flow trend remained decisively risk-off and heavily skewed toward large-scale selling in financials.

FPI Buying: Capex-Led Preference – On the buy side, FPIs remained selective, with Capital Goods leading inflows at ₹3,897 Cr, reflecting continued preference for the domestic capex theme. This was followed by Metals & Mining (₹876 Cr) and Power (₹602 Cr), while Consumer Services (₹531 Cr) and Chemicals (₹225 Cr) also attracted modest buying.

FPI Equity Selling Intensifies: FPIs remained aggressive sellers in 1st–15th Mar 2026, pulling out ₹52,704 Cr from equities—their sharpest fortnightly selling since Oct’24. The outflows were largely driven by the secondary market at ₹54,456 Cr, while primary market/IPO investments stood at ₹1,752 Cr, indicating heavy on-market selling despite selective participation in new issuances.

DII Buying Surges: Domestic Institutional Investors (DIIs) remained strong buyers in 1st–15th Mar 2026, with net equity purchases of ₹70,527 Cr, marking their highest fortnightly buying on record and topping the previous peak of ₹61,725 Cr seen in October 2024. The strong DII inflows helped absorb heavy foreign selling and supported market stability during the recent correction.

MF Equity Buying Stays Robust: Mutual Funds (MFs) remained net buyers in equities during 1st–15th Mar 2026, with inflows of ₹51,172 Cr, highlighting continued domestic support despite sharp market volatility. On a CY2026-to-date basis (1st Jan–15th Mar), MFs remain net buyers of ₹1,04,948 Cr in equities, indicating that mutual fund participation continues to provide a strong cushion to the market amid heavy foreign selling.

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

Equity MFs AUM Rose in February as Industry AUM Continued to Expand: Equity mutual funds’ Net AUM increased to ₹35.39 lakh crore in February from ₹34.87 lakh crore in January, marking a 1.51% MoM rise as broader markets remained supportive. Meanwhile, overall mutual fund industry Net AUM grew 1.26% MoM to ₹82.03 lakh crore from ₹81.01 lakh crore, indicating that sustained inflows and a diversified asset mix kept industry assets on an upward trajectory.

Mutual Funds Back February’s IPO Addition; Fractal Analytics Draws Strong Fresh Interest: Fractal Analytics emerged as the key IPO addition in February, with 29 equity mutual fund schemes initiating exposure and total holdings bought reaching 6.02%.

Mutual Funds Add Fresh Picks Across Financials, Consumption and Select Cyclicals: Beyond the IPO addition, funds added exposure across a diversified set of names led by PB Fintech, MCX, Vishal Mega Mart and IndusInd Bank, indicating preference for platform businesses, market infrastructure, consumption and financials. Incremental additions were also visible in Axis Bank, ICICI Bank, Bank of Baroda, Cholamandalam Investment, Kotak Mahindra Bank, Shriram Finance, Tata Steel, Cummins India and Tata Motors PV, pointing to broad-based buying across lenders, industrials, autos and metals.

Mutual Funds Execute Complete Exits in Select IT, Financial and Cyclical Names Amid Portfolio Realignment: On the exit side, schemes fully exited a set of stocks led by Kwality Wall’s (India), while additional exits were seen in Billionbrains Garage Ventures, Hindalco Industries, LTIMindtree, KPIT Technologies, Tech Mahindra, REC, Bajaj Finance, Cipla, Tata Consultancy Services, HDB Financial Services, Asian Paints and Mphasis. This suggests portfolio churn and tactical realignment across select IT, financial, consumer and cyclical exposures.

PB Fintech, Persistent Systems, Vishal Mega Mart & IndusInd Bank Lead Mid-Cap Buying; Bharat Forge, GE Vernova T&D and Coforge See Selling: In the mid-cap basket, equity mutual funds were net buyers in PB Fintech, Persistent Systems, Vishal Mega Mart, IndusInd Bank, Dixon Technologies, Bharat Heavy Electricals and Indus Towers, reflecting preference for financials, technology, consumption and select industrial names. Net selling, however, was visible in Bharat Forge, GE Vernova T&D India and Coforge, indicating tactical profit-booking and portfolio reshuffling in select auto ancillary, power and IT plays.

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

Mutual Funds’ Equity Buying Slips to Three-Year Low; Cash Holdings Edge Up: Mutual funds remained net buyers in equities in February, with investments of ₹11,422 Cr, reflecting cautious deployment. Notably, this was the lowest equity buying in nearly three years, and the weakest since July 2023. Meanwhile, cash holdings rose slightly to ₹2.10 lakh Cr from ₹2.06 lakh Cr in January, indicating a steady liquidity buffer. As a result, the cash-to-equity AUM ratio increased, signalling slower equity deployment despite steady inflows.

AMC Cash Levels Edge Up; Liquidity Buffers Stay Healthy: The average cash holding ratio across the top 20 AMCs rose marginally to 5.39% in February from 5.36% in January, reflecting a modest build-up in liquidity buffers amid evolving market conditions. The ratio remained above the 5% mark, suggesting that fund managers stayed cautious and retained some cash flexibility to navigate volatility and deploy capital as opportunities emerge.

PPFAS Mutual Fund holds the highest cash-to-AUM ratio at 21.19% (₹29,741 Cr), reflecting a distinctly defensive stance with ample flexibility for future deployment. Quant MF follows with a high 16.43% (₹13,006 Cr), while Axis MF (7.73%) and Bandhan MF (6.23%) also maintain relatively elevated cash allocations, indicating a cautious yet opportunity driven investment approach.

Flexi Cap Funds Lead in Cash Intensity: Parag Parikh Flexi Cap Fund holds the highest cash-to-AUM ratio at 21.64% (₹29,047 Cr), signalling a defensive yet opportunity-ready stance. HDFC Flexi Cap Fund follows with 9.60% (₹9,642 Cr) in cash, highlighting meaningful liquidity for tactical deployment as market conditions evolve.

Contra, Focused & Small Cap Schemes Maintain Strong Buffers:SBI Contra Fund retains elevated liquidity at 16.63% (₹8,168 Cr), reflecting a cautious yet opportunistic investment approach. Among focused strategies, SBI Focused Fund holds 16.82% (₹7,285 Cr) in cash to support its concentrated portfolio positioning. SBI Small Cap Fund keeps 13.99% (₹4,886 Cr) and HDFC Small Cap Fund holds 8.07% (₹3,020 Cr), reflecting prudent liquidity buffers to manage higher volatility in smaller companies.

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

The mutual fund industry maintained steady momentum in February 2026, with AAUM rising to ₹83.42 lakh crore from ₹82.01 lakh crore in January, supported by net inflows of ₹94.53K crore during the month.

Equity-oriented mutual fund inflows rose by 8% in February 2026 over January, marking a recovery after two consecutive months of decline and reflecting resilient investor participation despite ongoing market volatility.

Passive fund inflows declined sharply during the month, primarily due to a slowdown in gold ETF inflows after the record surge seen in the previous month, suggesting some pause in safe-haven allocations.

SIP inflows moderated to ₹29,845 crore in February 2026, largely due to fewer working days during the month, though the overall trend continued to reflect healthy retail participation.

Overall, the February 2026 flow pattern indicates that investors remained constructive, with debt, diversified, and flexible allocation categories continuing to attract interest amid a volatile market backdrop.

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

February 2026: FPIs Turn Equity Buyers, Debt Flows Stay Strong; DIIs Support the Market as MF Buying Hits a Three-Year Low

February 2026 Sectoral Rotation: FPIs Lean Into Capex and Domestic Cyclicals; IT Remains the Biggest Drag

Capex, Industrials and Domestic Cyclicals Lead the Buying Trend: FPI buying in February 2026 remained focused on capex-led and domestic cyclical sectors. Capital Goods was the top pick at ₹12,135 Cr, with flows stronger in the first half (₹8,032 Cr) than the second (₹4,103 Cr). Financial Services followed at ₹8,418 Cr, again front-loaded (₹6,175 Cr vs ₹2,243 Cr). Metals & Mining (₹5,638 Cr), Oil & Gas (₹5,381 Cr) and Power (₹4,506 Cr) also saw healthy inflows. Construction recorded ₹4,487 Cr, with buying rising in the second half to ₹2,742 Cr from ₹1,745 Cr, while Automobile saw a sharp late-month pickup with ₹3,075 Cr in the second half versus ₹511 Cr in the first, indicating stronger interest in domestic demand-linked themes.

Technology Outflows Dominate While Consumption Sees Late-Month Pressure

On the selling side, Information Technology remained the clear laggard, recording the deepest outflows of ₹16,949 Cr, with heavy selling in both halves of the month (₹10,956 Cr in the first and ₹5,993 Cr in the second). Consumer Services also saw a sharp reversal, moving from ₹1,066 Cr of buying in the first half to ₹5,238 Cr of selling in the second, ending the month with net outflows of ₹4,172 Cr. FMCG (₹1,951 Cr) and Telecommunication (₹1,881 Cr) remained under pressure, while Consumer Durables (₹756 Cr) and Textiles (₹100 Cr) also stayed net sold. Healthcare was relatively mixed, with first-half selling of ₹1,051 Cr partly offset by second-half buying of ₹722 Cr, resulting in a modest net outflow of ₹329 Cr. Utilities remained largely flat with negligible net selling of ₹6 Cr.

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