Month: May 2026

May Fortnight Review: FPIs Stay Risk-Off in Equities; FPI Debt Turns Positive, DIIs & MFs Cushion Pressure

FPIs Remain Selectively Risk-Off in First Half of May; Services Sees Buying, Financials Face Heavy Selling

FPI Selling: Financial Services Leads the Outflows – During 1st–15th May 2026, FPI selling remained concentrated in Financial Services, which saw the highest outflow of ₹17,960 Cr, making it the biggest drag during the fortnight. Selling was also seen in Oil & Gas at ₹6,885 Cr, followed by Telecom at ₹2,542 Cr, Information Technology at ₹1,643 Cr, FMCG at ₹1,625 Cr, Construction Materials at ₹1,207 Cr, Consumer Durables at ₹1,162 Cr and Power at ₹1,157 Cr. This indicates that FPIs continued to reduce exposure across key large-cap, consumption and rate-sensitive sectors.

FPI Buying: Selective Interest in Services and Capital Goods – On the buy side, FPI buying was relatively selective, led by Services, which attracted inflows of ₹7,019 Cr. Capital Goods also saw healthy buying of ₹2,645 Cr, followed by Metals & Mining at ₹1,698 Cr, while Diversified saw marginal inflows of ₹33 Cr.

FPIs Stay Risk-Off in First Half of May: FPIs remained net sellers in Indian equities during 1st–15th May 2026, recording outflows of ₹27,048 Cr. The pressure came mainly from the secondary market, where FPIs sold ₹27,178 Cr, while the primary market/IPOs saw small buying of ₹130 Cr. This shows that foreign investors continued to stay cautious in listed equities, even as IPO participation remained marginally positive.

DII Buying Remains Robust: Domestic Institutional Investors continued their strong buying momentum in the first half of May 2026, with net equity purchases of ₹39,917 Cr during 1st–15th May. For CY2026 till 15th May, DIIs have invested a strong ₹3,41,586 Cr in Indian equities, reinforcing their role as the key stabilising force as persistent FPI selling continues to weigh on market sentiment.

MF Equity Buying Remains Strong: Mutual Funds emerged as the major buyer within DIIs during 1st–15th May 2026, investing ₹33,191 Cr in equities against total DII buying of ₹39,917 Cr. This means MFs contributed nearly 83% of total DII equity inflows during the fortnight. On a CY2026-to-date basis, MFs have invested ₹2,16,307 Cr in equities.

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

Equity MF AUM Stages Strong Comeback as Industry Assets Rebound Broadly: Equity mutual funds’ Net AUM rebounded sharply in April, rising to ₹35.74 lakh crore from ₹31.98 lakh crore in March, reflecting an ~11.8% MoM increase. The recovery was supported by improved equity market sentiment, portfolio valuation gains and sustained investor participation. Overall mutual fund industry Net AUM also rose 11.11% MoM to ₹81.92 lakh crore, aided by equity market recovery, strong debt inflows and post year-end treasury redeployment.

Mutual Funds Added Fresh Exposure Across Consumption, Financials, Exchanges, Metals and Industrials: Equity mutual funds added fresh positions in a diversified set of stocks led by Titan Company, Radico Khaitan, 360 One WAM and BSE, reflecting selective interest across consumer discretionary, alcohol/consumption, wealth management and market infrastructure themes. Incremental additions were also visible in Varun Beverages, Steel Authority of India, Axis Bank, RBL Bank, MCX, Nippon Life India AMC and ABB India, indicating broad-based accumulation across consumer beverages, IT services, metals, private banks, exchanges, asset management and industrial automation/capital goods.

Mutual Funds Pare Exposure Across Metals, Banking, IT, Energy and Auto Names Amid Portfolio Rotation: On the exit side, equity mutual funds reduced or exited positions most notably in Vedanta, HDFC Bank, HCL Technologies and ICICI Prudential AMC, indicating portfolio reshuffling across metals & mining, private banking, IT services and asset management. Other notable reductions were seen in LG Electronics India, Reliance Industries, Wipro, Hyundai Motor India and Mahindra & Mahindra, reflecting continued churn across consumer durables, energy/conglomerates, automobiles and technology exposures.

Eternal, ICICI Bank & Shriram Finance Lead MF Buying; BFSI, Auto, Pharma and IT Names Also Attract Net Adds: In the Top 20 traded stocks, equity mutual funds recorded the strongest net additions in Eternal, ICICI Bank, Shriram Finance, SBI Life Insurance, Maruti Suzuki, State Bank of India, Sun Pharma and Infosys, reflecting continued preference for new-age consumption, private banking, NBFCs, insurance, automobiles, PSU banking, pharmaceuticals and IT services. Incremental buying was also visible in Larsen & Toubro, Tata Consultancy Services, Hindustan Unilever and Axis Bank, indicating steady allocation toward large-cap leaders, core franchises and selective growth opportunities.

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

Mutual Funds Deploy Cash Gradually Amid Sharp Market Gains in April: Mutual funds reduced the pace of equity buying in April, investing ₹30,594 crore during the market rebound, significantly lower than the record ₹98,746 crore buying in March. Meanwhile, cash holdings rose to ₹1.98 lakh crore from ₹1.86 lakh crore. However, the cash-to-AUM ratio edged lower, indicating that the sharp market rebound expanded equity AUM faster than cash accumulation, while deployment remained gradual.

AMC Cash Levels Ease, but Caution Persists: The average cash holding ratio across the top 20 AMCs eased to 5.03% in April from 5.16% in March, as equity-oriented AUM rose faster than absolute cash holdings, supported by gains in Indian equities. However, with cash levels still near 5%, fund managers appear to be maintaining a cautious stance while retaining liquidity to manage volatility and capture emerging opportunities.

PPFAS Mutual Fund holds the highest cash-to-AUM ratio at 18.71% with ₹27,559 Cr in cash, reflecting a distinctly defensive stance with strong flexibility for future deployment. Quant MF follows with a notable 14.38% cash holding or ₹12,076 Cr, while Axis MF also maintains an elevated cash buffer at 7.60% or ₹14,870 Cr, indicating a cautious yet opportunity-driven investment approach.

Flexi Cap Funds Lead in Absolute Cash Stash: Parag Parikh Flexi Cap Fund holds the highest cash buffer at ₹27,035 Cr, with cash forming 19.18% of AUM, signalling a defensive yet opportunity-ready stance. HDFC Flexi Cap Fund follows with ₹7,177 Cr in cash, or 7.14% of AUM, indicating liquidity available for tactical deployment as market conditions evolve.

Contra & Flexi Cap Funds Remain Cash Leaders: Contra Funds continue to top the liquidity spectrum with an 11.71% cash-to-AUM ratio and ₹8,418 Cr cash holding, reflecting a cautious yet opportunity-oriented stance. Flexi Cap Funds follow with 8.45% in cash or ₹47,314 Cr, underscoring their flexibility to dynamically allocate across market segments as opportunities evolve.

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

The mutual fund industry recovered strongly in April 2026, with Average AUM rising to ₹81.94 lakh crore from ₹79.46 lakh crore in March, supported by total net inflows of ₹3.22 lakh crore, largely led by heavy debt inflows.

Equity-oriented inflows moderated by 5% to ₹38,440 crore in April, weighed by near-term caution from higher crude prices amid the Iran conflict and fewer working days, even as broader investor conviction stayed intact.

Hybrid funds witnessed a sharp turnaround with net inflows of ₹20,565 crore, driven by a strong reversal in Arbitrage funds as institutional money returned post the year-end pullout.

Passive fund inflows moderated to ₹20,082 crore as Index Funds and Other ETFs normalised, while Gold ETFs attracted steady inflows on safe-haven demand and FoFs investing overseas saw a sharp uptick.

Debt mutual funds recorded an all-time high monthly net inflow of ₹2.47 lakh crore, with record inflows of ₹1.65 lakh crore into liquid funds, as corporates redeployed treasury cash withdrawn in March for advance tax and GST payments.

SIP inflows eased marginally to ₹31,115 crore from March’s record level, but remained historically strong, reflecting sustained retail commitment.

Overall, April 2026 reflects a strong post financial year-end normalisation, with record debt inflows, resilient equity participation, and steady SIP momentum lifting industry AUM higher.

April 2026: FPIs Extend Equity & Debt Selloff, While DIIs & Mutual Funds Continue to Anchor Market Support

April 2026 Sectoral Rotation: Financials Face Heavy FPI Selling; Power and Capital Goods See Selective Buying

Financial Services Leads the Selloff; Consumer Services, Healthcare and Oil & Gas Also Remain Under Pressure: On the selling side, Financial Services remained the biggest drag by a wide margin, witnessing outflows of ₹30,856 Cr, with selling continuing across both halves of the month at ₹19,152 Cr and ₹11,704 Cr, respectively.

Consumer Services saw the second-highest selling at ₹7,770 Cr, followed by Healthcare at ₹6,926 Cr and Oil & Gas at ₹6,703 Cr. Among other sectors, Automobile (₹5,479 Cr), Telecommunication (₹4,400 Cr), IT (₹4,212 Cr) and FMCG (₹3,205 Cr) also witnessed outflows, indicating broad-based FPI caution across both cyclical and defensive sectors.

Power and Capital Goods Emerge as Key Buying Pockets: FPI buying in April 2026 remained selective, with Power leading inflows at ₹5,557 Cr, supported by strong buying of ₹4,956 Cr in the second half of the month. Capital Goods followed with inflows of ₹4,339 Cr, as FPIs turned buyers in the second half after mild selling in the first half. Metals & Mining (₹1,218 Cr) and Construction (₹926 Cr) also saw positive flows. Overall, the trend suggests that FPIs stayed cautious in April, but continued to prefer Power, Capital Goods and select domestic capex-linked themes.

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