Mutual Funds

July Fortnight Review: FPIs Slash Equities, Ramp Up Debt; DIIs & MFs Turn Cautious

FPI Selloff Hits IT and FMCG: Defensive Sectors See Heavy Profit Booking – The Information Technology sector bore the brunt of FPI selling in early July, with massive outflows of ₹5,479 Cr, indicating a continuation of profit-booking seen over recent months. FMCG(₹1,428 Cr) and Consumer Durables(₹1,292 Cr) were the next in line, suggesting that FPIs are turning cautious on defensives amid stretched valuations. Other sectors witnessing notable exits include Automobiles(₹1,159 Cr), Healthcare(₹757 Cr), Realty, Media and Construction.

FPI Sectoral Buys: Services, Metals and Consumer Plays Shine in July – During the first half of July 2025, FPIs showed selective buying interest, primarily in domestic-facing and infrastructure-related sectors. Leading the charge was the Services sector with ₹2,733 Cr of inflows, followed by Metals & Mining at ₹1,724 Cr. Consumer Services (₹953 Cr), Capital Goods (₹922 Cr), Oil & Gas (₹900 Cr) and Financial Services (₹820 Cr) drew notable FPI interest, along with modest picks in Telecommunication and Textiles.

FPI Investment Scorecard 2025: Telecom and Financials Lead the Buying Spree – For year-to-date, FPIs favoured Telecommunication (₹26,968 Cr), Financial Services (₹14,537 Cr) and Services (₹10,027 Cr), with steady flows into Chemicals, Media, Textiles and Oil & Gas—highlighting a tilt towards structural growth and domestic demand themes.

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

Mutual Funds Stay Selective Despite Market Optimism: India’s equity mutual funds embraced a more confident tone in June 2025, stepping up their market purchases amid a surge in investor appetite. Backed by robust equity inflows and record-breaking SIP contributions, the industry’s cash holdings stood at ₹2.04 Lakh Cr—only marginally lower than May’s ₹2.17 Lakh Cr. This modest dip signals that while fund managers are gradually deploying capital, they continue to tread with caution, maintaining healthy liquidity buffers for strategic opportunities ahead.

Cash Holding Ratio Slips Below 5% as Equity Allocation Rises: The average cash holding ratio among the top 20 AMCs declined to 4.88% in June 2025, slipping well below the 5% mark and down from 5.75% in May. This steady drop reflects a measured increase in equity allocations, signaling growing conviction among fund managers while still maintaining prudent liquidity levels.

Cash-Heavy Mutual Funds: PPFAS Tops with 19.65%, SBI Holds ₹34,655 Cr – SBI MF holds the largest pile at ₹34,655 Cr, followed by ICICI Pru MF ₹28,196 Cr and HDFC MF MF ₹27,013 Cr, showing significant dry powder among large AMCs. PPFAS MF leads the pack with the highest cash holding ratio at 19.65%, reflecting its conservative and flexible investment approach. Motilal Oswal MF and Quant MF follow with 8.64% and 7.25% of AUM in cash, respectively, highlighting strong liquidity positioning.

Parag Parikh Flexi Cap Fund holds the highest cash ratio among equity schemes at 19.89%, reflecting a strong liquidity stance amid prevailing market uncertainties. Close behind, SBI Contra Fund and SBI Small Cap Fund maintain elevated cash levels of 19.29% and 17.44%, respectively, positioning themselves among the most liquidity-heavy active equity strategies. Motilal Oswal Midcap Fund also stands out with a notable 16.63% in cash, while HDFC Focused Fund holds 16.07%, both indicating a cautious and flexible approach in response to potential market volatility.

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

Equity MF AUM Hits Fresh Peak on Market Euphoria & Record SIPs: Equity mutual funds extended their stellar run in June with a sharp 4.41% rise in Net AUM to a record ₹33.47 Lakh Cr, driven by strong market performance and record SIP inflows, reflecting rising investor confidence and a bullish retail sentiment.

IPO Debuts Shine Bright on MF Radar in June: Equity Mutual Funds showed strong enthusiasm for newly listed IPOs — HDB Financial Services led with 50 schemes adding it, while Ellenbarrie Industrial Gases and Oswal Pumps also garnered notable traction.

Fresh Bets: MFs Diversify Across Key Growth Sectors: Stocks like Vishal Mega Mart, Biocon, Interglobe Aviation, Swiggy, Aptus Value Housing, ZF Commercial Vehicle, Kaynes Technology, Tech Mahindra, One97 Communications, Aditya Birla Capital, Blue Star and Torrent Pharma were actively added as fresh investments by several equity mutual fund schemes, reflecting growing appetite across consumer, healthcare, financials, tech and auto-related sectors.

MFs Book Profits, Exit Key Names Amid Market Rotation: Many equity mutual fund schemes exited stocks like TCS, BSE, ICICI Bank, Cholamandalam Finance, United Spirits, Indian Bank, ITC, Dixon Technologies, Tata Motors, Eternal, Federal Bank, Bajaj Finance, Mazagon Dock, Page Industries and Ipca Labs, indicating profit booking and portfolio reshuffling amid shifting market dynamics.

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

The mutual fund industry’s average AUM touched a record ₹74.79 lakh crore in June, up 3.61% over May, backed by ₹49,095 crore in net inflows and continued equity market strength.

Equity mutual fund inflows surged 24% month-on-month to ₹23,587 crore in June, marking the 52nd consecutive month of positive flows. Flexi-Cap and Small-Cap funds led the rally, while Value/Contra Funds reversed from May’s outflow to post ₹1,159 crore in inflows.

Hybrid funds attracted ₹23,223 crore in June, up 12%, driven by strong flows into Arbitrage Funds. The trend highlights a growing tilt toward low-risk strategies amid market uncertainty.

Debt mutual funds reported a 3.25% rise in average AUM despite net redemptions of ₹1,711 crore. Short Duration Funds topped the chart with ₹10,277 crore in inflows, followed by ₹7,124.5 crore in Corporate Bond Funds.

Gold ETFs saw a sharp jump in inflows to ₹2,081 crore from just ₹292 crore in May, aided by rising gold prices and diversification appeal.

SIP inflows reached a new all-time high of ₹27,269 crore, rising 2% from May, reflecting consistent retail participation and long-term investment discipline.

For more details read through our comprehensive Mutual Fund Flow Report for June, 2025.

Market Cap Cutoffs Fall in Latest Stock Categorization :- In the recent stock categorization, the Large Cap cutoff for average market capital over last 6 months has declined to ₹91,500 Cr from ₹1 Lakh Cr. Similarly, the Mid Cap cutoff for average market capital over last 6 months has decreased to ₹30,700 Cr from ₹33,000 Cr, as observed in the first half of calendar year 2025.

AMFI’s Latest: 11 Stocks Elevated to Large Cap :- In the latest AMFI stock categorization, ten stocks have been upgraded from Mid Cap to Large Cap, including Apollo Hospitals, Jindal Steel & Power, Lupin, Max Healthcare, Mazagon Dock, Shree Cement, Solar Industries, Indian Hotels Co. and Union Bank of India. Siemens Energy India, a demerged entity, has also been newly added to the Large Cap category based on market capitalization.

For more details read through our comprehensive report

June saw increased volatility in the debt market post-policy, crude oil swings driven by geopolitical tensions, banking system liquidity at a three-year high, and the rupee remaining resilient amid a softening dollar backdrop.

Money Market and Low Duration Funds led the sub-1-year segment, posting strong 3-month annualised returns of 8.58% and 8.88% on elevated short-term rates and active positioning.

Short to Medium Duration funds and Credit Risk funds posted strong 3–12 month returns, reflecting favourable accrual and duration positioning.

Domestic bond yields rose sharply in June, with the 10-year benchmark climbing 9 bps, reversing the softening trend observed in May.

Liquidity conditions remained comfortably surplus in June, with rising systemic liquidity prompting calibrated RBI interventions to manage short-term rates and absorb excess funds.

The Indian rupee ended June marginally lower, underperforming Asian peers amid muted inflows and structural external imbalances, though it rebounded from late-month geopolitical-driven lows.

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

Sector Shuffle: FPIs Load Up on Financials & Oil, Trim Power & FMCG

Sectors in Demand: FPIs Chase Financials, Oil & Auto in June

• Financial Services led FPI inflows in June with a hefty ₹8,946 Cr, closely followed by Oil & Gas at ₹6,137 Cr, signaling strong confidence in India’s core sectors. A sharp turnaround was seen in Automobiles and Telecommunication, where early exits flipped into aggressive second-half buying, resulting in net inflows of ₹4,724 Cr and ₹2,733 Cr respectively.
• Chemicals also drew steady interest with ₹2,392 Cr, while Consumer Services witnessed renewed traction, ending with ₹1,348 Cr. FPIs added ₹910 Cr in Realty and showed a mild positive stance on IT, with net inflows of ₹1,166 Cr, reversing early selling pressure.

FPIs Exit Power, FMCG & Durables in June

• Power led the FPI outflows in June with a sharp withdrawal of ₹6,311 Cr, followed by FMCG where net selling amounted to ₹3,985 Cr, reflecting profit booking in defensives. Consumer Durables saw an outflow of ₹2,493 Cr, while Capital Goods faced net selling of ₹1,831 Cr as FPIs rotated away from cyclical exposures.
• Diversified sectors witnessed net withdrawals of ₹1,162 Cr, while Healthcare and Metals & Mining saw outflows of ₹1,092 Cr and ₹1,016 Cr respectively. Construction too saw mild selling pressure with FPIs pulling out ₹748 Cr, suggesting a broader recalibration of sectoral positions.

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

Mutual Fund Industry Average AUM Scales Fresh Peak at ₹72.14 Lakh Cr in Q1FY26

Record High AUM on Equity Market Rally: The average AUM of the mutual fund industry surged by 7% quarter-on-quarter to an all-time high of ₹72.14 Lakh Cr during the April–June 2025 quarter. This growth was largely driven by strong equity market gains, especially in the midcap and smallcap segments, which rallied over 10%. For the first half of CY2025, the MF industry recorded a 5.13% increase in average AUM, supported by record SIP inflows and sustained bullish momentum in equities.

SBI Mutual Fund Hits Record AUM of ₹11.40 Lakh Cr in Q1FY26 : SBI Mutual Fund achieved a historic milestone by reaching an average AUM of ₹11.40 Lakh Cr during the April–June 2025 quarter. This marks the 22nd consecutive quarter that SBI Mutual Fund has retained its position as the largest fund house in India, underscoring consistent investor confidence and sustained market leadership.

Equity Rally Lifts AUM of Top Fund Houses: Driven by gains in the equity markets, leading equity-oriented fund houses witnessed strong AUM growth in the April–June 2025 quarter. SBI Mutual Fund recorded the highest absolute increase in average AUM, followed closely by ICICI Prudential, Nippon India and HDFC Mutual Fund.

Top Fund Houses Maintain Stability; Mirae Rejoins Elite Club: The mutual fund industry continues to reflect strong structural stability, with the top 3 and top 8 fund houses retaining their positions for an impressive 16 consecutive quarters. In a key development this quarter, Mirae Asset Mutual Fund made a comeback into the top 10 rankings, overtaking Tata and DSP Mutual Funds. Conversely, Tata Mutual Fund slipped out of the top ten in terms of average AUM, marking a notable reshuffle in the industry leaderboard.

Rising Stars in Mutual Funds: Mirae, Invesco, PPFAS and Trust Mutual Fund have climbed the ranks, marking strong progress over previous quarters.

Top Gainers by Percentage: Emerging AMCs Post Stellar AUM Growth – In the April–June 2025 quarter, several emerging and mid-sized AMCs—including Angel One, Unifi, Old Bridge, Zerodha, Trust, Groww, WhiteOak Capital, Helios, Bajaj Finserv, PPFAS and Motilal Oswal Mutual Fund—delivered stand out percentage growth in average AUM. This surge reflects their accelerating momentum and increasing investor traction, building on strong performance and expanding distribution in recent quarters.

19 AMCs Now Manage Over ₹1 Lakh Cr Each in Average AUM – As of the April–June 2025 quarter, 19 of the 46 active mutual fund houses have reported average AUM above ₹1 lakh crore. This milestone highlights the increasing scale and deepening consolidation within the Indian mutual fund industry.

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

FPI Buying Focused on Financials and Chemicals in June – Foreign Portfolio Investors showed strong interest in Financial Services, infusing ₹4,685 Cr during the first half of June 2025. Chemicals also attracted ₹1,405 Cr, reflecting a preference for defensive and globally integrated sectors. Oil & Gas and Capital Goods saw over ₹1,190 Cr each, indicating continued faith in core infrastructure themes. Realty, Services, Textiles and Media saw moderate inflows.

Heavy FPI Selling in FMCG & Power – FMCG led FPI outflows in early June with net selling of ₹3,626 Cr, likely due to high valuations and rural demand concerns. Power saw outflows of ₹3,120 Cr amid global yield volatility. Consumer Durables (₹1,893 Cr), IT (₹1,713 Cr) and Consumer Services (₹1,461 Cr) also saw pressure, indicating reduced appetite for rate-sensitive sectors. Telecom, Construction Materials and Metals & Mining faced smaller withdrawals.

FPI Sell-Off Resumes After Two-Month Relief – After reversing their selling streak with inflows of ₹4,223 Cr in April and ₹19,860 Cr in May, FPIs turned net sellers again in the first half of June 2025, offloading ₹5,401 Cr from equities. This retreat signals renewed caution amid global yield pressures and valuation concerns. On a year-to-date basis, FPIs have pulled out a massive ₹97,892 Cr from Indian equities, making 2025 one of the most volatile years for foreign flows.

FPI Debt Outflows Surge Amid Yield Volatility – FPIs also turned aggressive sellers in the Indian debt market, withdrawing a massive ₹27,063 Cr in the first half of June — the highest fortnightly debt outflow in 2025. This contrasts with their YTD debt inflows of ₹9,584 Cr, indicating rising concerns over global rate dynamics and currency stability. The sharp reversal could put pressure on bond yields and the rupee if the trend sustains.

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

Equity Mutual Funds Turn Buoyant in May Amid High Cash Reserves: India’s equity mutual funds adopted a more optimistic stance in May 2025, ramping up market purchases despite a decline in net inflows. However, overall cash holdings remained elevated at ₹2.17 Lakh Crore—only slightly lower than ₹2.3 Lakh Crore in April—indicating continued caution and selective deployment.

Top AMCs Cash Holding Ratio Falls to 5.75%: The average cash holding ratio among the top 20 AMCs declined to 5.75% in May, down from 6.53% in April, reflecting a measured increase in equity allocations.

PPFAS MF leads the pack with the highest cash holding ratio at 21.62%, reflecting its conservative and flexible investment approach. SBI MF holds the largest pile at ₹34,747 Cr, followed by HDFC MF ₹27,133 Cr and ICICI Pru MF ₹26,752 Cr, showing significant dry powder among large AMCs. Motilal Oswal MF and Quant MF follow with 13.56% and 10.35% of AUM in cash, respectively, highlighting strong liquidity positioning.

Motilal Oswal Flexi Cap Fund leads with the highest cash holding ratio at 33.34%, followed closely by Motilal Oswal Midcap Fund and Parag Parikh Flexi Cap Fund have cash holding ratios at 24.54% and 23.79% respectively, among the highest in active equity schemes. SBI Contra Fund and SBI Small Cap Fund maintain over 20% in cash.

Contra Funds top the chart with 16.08% of AUM in cash, indicating a highly cautious or opportunistic approach amid market uncertainty, Flexi Cap Funds follow with a substantial 10.26%, indicating a deliberate strategy focused on liquidity and tactical allocation flexibility. Focused Funds, with 8.76% in cash, appear to support their concentrated stock-picking approach with a healthy liquidity buffer. Small and Mid Cap Funds also show prudence, holding 7.98% and 7.15% respectively, likely to weather short-term volatility or await better entry points.

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