Equity Buying Accelerates in May: Mutual funds stepped up equity deployment in May 2026, with net equity purchases of ₹63,087 crore, providing strong domestic support despite continued FPI selling. Overall equity-oriented MF cash holdings declined to ₹1.88 lakh crore from ₹1.98 lakh crore in April, suggesting that fund managers used the mild market correction to deploy cash and add equities even as equity MF inflows hit a one-year low.
AMC Cash Levels Ease, but Caution Persists: The average cash holding ratio across the top 20 AMCs eased to 4.79% in May, down from 5.03% in April, as equity-oriented AUM continued to expand and fund managers deployed cash amid improving market conditions. With cash levels slipping below the 5% mark, the trend suggests a sustained risk-on stance and a preference to remain more fully invested, while still maintaining sufficient liquidity to navigate market volatility and capitalize on emerging opportunities.
PPFAS Mutual Fund continues to hold the highest cash-to-AUM ratio at 17.67%, with ₹26,104 Cr in cash, reflecting a distinctly defensive stance and ample flexibility for future deployment. Quant MF follows with a sizeable 13.89% cash holding (₹12,182 Cr), while DSP MF (6.90%) and Axis MF (6.79%) also maintain relatively elevated cash buffers, indicating a cautious yet opportunity-driven investment approach.
Flexi Cap Funds Lead in Absolute Cash Stash: Parag Parikh Flexi Cap Fund holds the largest cash buffer at ₹25,652 Cr, with cash accounting for 18.14% of AUM, reflecting a defensive yet opportunity-ready stance. HDFC Flexi Cap Fund follows with ₹7,458 Cr in cash (7.32% of AUM), indicating ample liquidity for tactical deployment as market opportunities evolve.
Contra & Flexi Cap Funds Continue to Lead Cash Holdings: Contra Funds remain the most cash-heavy category with an 11.29% cash-to-AUM ratio and ₹8,155 Cr in cash, reflecting a cautious yet opportunity-driven stance. Flexi Cap Funds follow with 8.16% cash holdings or ₹46,079 Cr, highlighting their ability to dynamically allocate across market segments as opportunities arise.
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