Mata Securities India Pvt Ltd | SEBI Registered Research Analyst | Reg. No. INH000022668 | AMFI Registered MF Distributor | ARN-0158
Equity Buying Declines; Cash Holdings Fall as Mutual Funds Continue Deployment: Mutual funds invested ₹39,251 crore in equities during October 2026, down 18.2% from ₹47,967 crore in September, indicating moderation in equity purchases. Meanwhile, equity-oriented mutual fund cash holdings declined to ₹1.75 lakh crore in October from ₹1.83 lakh crore in September, reflecting continued deployment of available liquidity. With equity purchases exceeding ₹32,994 crore of net equity fund inflows, fund managers appear to have utilised a portion of their existing cash reserves to support equity investments.
AMC Cash Holdings Decline in October as Fund Managers Deploy Liquidity: The average cash holding ratio across the top 20 AMCs declined to 4.25% in October from 4.59% in September, a reduction of 34 bps. Despite moderating equity inflows and lower mutual fund equity purchases, the decline suggests continued deployment of cash reserves amid the broader market correction. Cash-heavy fund houses, including Quant MF and PPFAS MF, also reduced their cash allocations significantly, indicating selective buying opportunities at lower market valuations.
Quant Mutual Fund holds the highest cash-to-AUM ratio at 13.24%, with ₹11,659 Cr in cash, closely followed by PPFAS MF at 13.12% with ₹20,096 Cr. The elevated liquidity levels indicate a relatively cautious stance and provide fund managers with greater flexibility to deploy capital as attractive opportunities emerge.
Parag Parikh Flexi Cap Fund Leads in Absolute Cash Holdings: Parag Parikh Flexi Cap Fund holds the largest cash reserve at ₹19,559 Cr (13.33% of AUM), followed by HDFC Mid Cap Fund at ₹6,928 Cr (6.88%) and SBI Small Cap Fund at ₹6,320 Cr (16.12%).
Contra & Flexi Cap Funds Lead Cash Holdings: Contra Funds remain the most cash-heavy category at 9.15% of AUM (₹6,634 Cr), reflecting a cautious yet opportunity-driven approach, while Flexi Cap Funds hold the largest absolute cash pile of ₹36,526 Cr (6.17% of AUM), providing fund managers with significant flexibility for tactical deployment across market segments.
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