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October Fortnight Review: DIIs & MFs Stay Resilient as FPIs Return to Buying

FPIs Turn Selective Buyers in October – FPIs turned active in cyclical and financial sectors during the first half of October 2025, led by strong inflows into Financial Services (₹8,276 Cr), Automobile & Auto Components (₹1,560 Cr) and Metals & Mining (₹1,395 Cr). Buying interest also extended to Power (₹1,103 Cr) and Oil & Gas (₹1,086 Cr), reflecting confidence in core and growth-linked segments, while Construction (₹641 Cr), Services (₹234 Cr), and Media & Entertainment (₹87 Cr) saw modest participation.

FPI Selling Focused on FMCG and IT – On the flip side, FPIs trimmed holdings in FMCG (₹2,992 Cr) and Healthcare (₹2,739 Cr), extending pressure on defensive and consumption-driven sectors. Selling was also evident in Information Technology (₹1,927 Cr) and Consumer Services (₹1,785 Cr), while Capital Goods (₹851 Cr), Realty (₹807 Cr) and Chemicals (₹316 Cr) saw moderate outflows.

FPIs Turn Buyers in October – Foreign Portfolio Investors (FPIs) turned net buyers in Indian equities during the first half of October 2025, reversing three straight months of selloff. They invested ₹3,631 Cr into equities, supported by easing global risk sentiment, softening U.S. yields and rate cut expectations by major central banks — signaling renewed optimism toward India’s growth outlook. FPIs also infused ₹6,657 Cr into debt, extending their preference for fixed income assets amid attractive real yields and bond index inclusion prospects. The steady debt inflows highlight a tactical shift toward stability and yield-driven opportunities.

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

Equity MFs Maintain Growth in September: Equity mutual funds clocked a steady performance in September, with net AUM rising 1.81% to ₹33.68 Lakh Cr from ₹33.09 Lakh Cr in August. The overall mutual fund industry also saw moderate growth, with Net AUM up 0.57% to ₹75.61 lakh crore. The equity surge was powered by robust inflows, record SIP contributions and measured market gains during the month.

Mutual Funds Eye Fresh Opportunities in Select IPOs: Equity mutual funds showed strong primary-market participation in September, with selective allocations to newly listed companies. Key IPO entries included Urban Company(30 schemes; 3.26%), Jain Resource Recycling(16 schemes; 2.72%), and Seshaasai Technologies(13 schemes; 3.55%), reflecting rising investor appetite for innovative, asset-light and technology-driven business models.

Mutual Funds Expand Portfolios with New Stock Additions: Schemes actively added positions in Aptus Value Housing Finance, Britannia Industries Eicher Motors, Cohance Lifesciences, M&M, Hindustan Aeronautics, Tube Investments of India, Eternal, Indian Bank, SBI Cards and L&T Finance. The additions indicate broad-based buying across consumption, auto, financial, and manufacturing sectors.

Funds Restructure Portfolios with Targeted Exits: On the sell side, mutual funds exited holdings in Max Healthcare Institute, Siemens Energy India, Suzlon Energy, Hyundai Motor India, BSE, Tata Motors, Jio Financial Services, Indus Towers, PB Fintech, HDB Financial Services, PNB Housing Finance, ONGC, Page Industries, Sun Pharmaceutical Industries and AWL Agri Business.

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

Strong Buying – Equity MFs Deploy Cash: Equity mutual funds ramped up deployment in September 2025, investing ₹46,442 crore in equities. Overall cash holdings stood at ₹1.99 lakh crore, marginally higher than ₹1.98 lakh crore in August, reflecting an active and opportunity-driven allocation strategy.

AMC Cash Ratio Falls Further in September: The average cash holding ratio among the top 20 AMCs slipped to 4.57% in September from 4.82% in August, keeping overall levels below the 5% mark. The decline reflects strong equity buying and reduced inflows on a month-on-month basis.

PPFAS Mutual Fund continues to hold the highest cash-to-AUM ratio at 22.46% (₹28,152 Cr), reflecting a distinctly conservative stance and readiness for tactical deployment. Quant MF follows with a notable 10.90% (₹9,315 Cr), while HDFC MF maintains 6.23% (₹26,851 Cr), well above the industry average.

Parag Parikh & SBI Contra Lead in Cash Proportion: Parag Parikh Flexi Cap Fund continues to top the list with 22.71% of AUM in cash (₹26,129 Cr), followed closely by SBI Contra Fund at 21.57% (₹10,064 Cr), underscoring a strong liquidity stance. HDFC Flexi Cap Fund holds 11.38% (₹9,327 Cr), signalling ample readiness to deploy funds when valuations turn attractive.

Contra & Flexi Cap Funds Lead the Liquidity Charts: Contra Funds top the list with the highest cash-to-AUM ratio of 15.00% (₹10,661 Cr), underscoring a highly defensive and opportunistic approach amid market uncertainty. Flexi Cap Funds follow with 9.74% (₹49,502 Cr), indicating fund managers’ continued focus on liquidity and tactical flexibility to navigate volatile conditions.

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

The mutual fund industry witnessed steady momentum in September, with Average AUM rising 1.39% to ₹77.77 lakh crore, reflecting continued investor confidence and diversification trends.

Equity-oriented schemes continued to attract healthy participation, recording net inflows of ₹30,422 crore, though 9% lower than August. Within this segment, Flexi Cap funds stole the spotlight, posting the highest monthly inflows among all equity categories.

On the passive side, inflows surged 66%, underscoring the growing investor preference for low-cost investing amid subdued activity in active equity and debt schemes. Index funds and ETFs together recorded a 67% rise in inflows to ₹19,056 crore, led by Gold ETFs, which saw record inflows.

In contrast, debt mutual funds saw their average AUM decline 2.09% to ₹19.02 lakh crore, with net outflows of ₹1.02 lakh crore — a trend typically observed around quarter-end institutional redemptions.

Meanwhile, retail participation remained robust, with SIP inflows hitting an all-time high of ₹29,361 crore, marking another milestone in India’s growing culture of disciplined investing.

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

September 2025 reflected a market in transition—balancing between domestic growth optimism and external headwinds. The focus now shifts to upcoming monetary policy reviews, global trade developments, and economic data releases, which will shape the near-term trajectory. Market participants remain cautiously optimistic, prioritizing quality assets amid low volatility and seeking clarity on policy direction before committing larger positions.

• The 10-year government bond yield stayed broadly steady around 6.58%, with brief spikes due to fiscal concerns but anchored by stable domestic factors.
• The RBI maintained the policy rate at 5.50%, citing low inflation and scope to support growth; a lower borrowing calendar eased supply concerns.
• The RBI revised FY26 GDP growth to 6.8% (up 30 bps) and lowered CPI inflation forecast to 2.6%
• Corporate bond yields remained stable and edged lower than August levels, supported by strong demand for high-quality credit.
• Liquidity surplus declined sharply to ₹1.47 lakh crore in September from ₹2.84 lakh crore in August, mainly due to GST and advance tax outflows, leading to firmer money market rates.
• The Indian Rupee was the worst-performing Asian currency, weakening to near an all-time low of 88.80 due to FPI outflows and high U.S. rates.
• Crude oil prices remained range-bound near $68/barrel amid balanced supply-demand conditions.

Click below to read the full snapshot attached.

September Snapshot: FPIs Extend Equity Selloff, While DIIs and MFs Lead with Robust Inflows Across Equities

September’s Sectoral Moves: FPIs Dump IT & Healthcare

• IT & Healthcare Lead the Sell-Off: Foreign Portfolio Investors (FPIs) continued their sectoral reshuffling in September, aggressively trimming positions in Information Technology (₹6,050 Cr) and Healthcare (₹6,122 Cr) — the two worst-hit sectors of the month. Selling in IT was broad-based, with ₹2,014 Cr offloaded in the first half and ₹4,036 Cr in the second, as global tech valuations remained under pressure. Healthcare mirrored this trend, witnessing ₹1,601 Cr of sales early in the month and ₹4,521 Cr later after Trump’s pharma tariff.
• Consumer and Realty Stocks See Continued Outflows: FPIs also pared exposure in FMCG (₹4,202 Cr), Consumer Durables (₹3,627 Cr) and Consumer Services (₹3,360 Cr) amid concerns over stretched valuations and moderating consumption trends. Sectors like Power (₹2,693 Cr), Telecommunication (₹2,422 Cr) and Realty (₹2,259 Cr) too witnessed steady selling.

Selective Buying in Domestic Plays: FPIs Rotate into Automobiles and Capital Goods

• Automobiles and Capital Goods Emerge as Bright Spots: Amid the widespread selloff, FPIs selectively turned buyers in domestic-oriented sectors. The Automobile sector led with net inflows of ₹3,641 Cr, supported by sustained demand momentum and robust festival season outlook. Capital Goods followed closely with ₹3,010 Cr of net buying, driven by renewed optimism in infrastructure spending and corporate capex recovery.
• Metals, Financials & Construction Attract Interest: FPIs also added to positions in Metals & Mining (₹1,840 Cr), Financial Services (₹992 Cr) and Construction (₹856 Cr), signaling selective re-entry into cyclical and growth-linked sectors. Even Media & Entertainment (₹77 Cr) turned positive during the month.

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

Mutual Fund Industry Average AUM Scales Fresh Peak at ₹77.15 Lakh Cr in Q2FY26

Record High AUM on Robust Inflows & SIP Momentum: The mutual fund industry’s average assets under management (AUM) touched a historic peak of ₹77.15 lakh crore in the July–September 2025 quarter, marking a 6.94% quarter-on-quarter surge. This stellar growth was powered by consistent retail participation, steady SIP inflows, and broad-based investor confidence. Notably, during the first half of FY 2026, the industry clocked an impressive 14.42% rise in average AUM, reaffirming the sector’s expanding footprint in India’s investment landscape.

SBI Mutual Fund Scales New Peak at ₹11.99 Lakh Cr AAUM : SBI Mutual Fund achieved a record average AUM of ₹11.99 lakh crore in the July–September 2025 quarter, setting a new industry benchmark. This milestone marks the 23rd consecutive quarter of its dominance as India’s largest fund house, reflecting unwavering investor trust, robust distribution strength, and sustained market leadership across categories.

Fund Houses Ride the Wave of Inflows & SIP Strength:  Buoyed by robust investor inflows and steady SIP contributions, the mutual fund industry’s leaders delivered impressive AUM growth in the July–September 2025 quarter. ICICI Prudential Mutual Fund topped the charts with the highest absolute increase of ₹70,511 crore in average AUM, with SBI, HDFC and Nippon India Mutual Fund following behind.

Industry Leadership Remains Stable, Tata MF Rejoins Top 10: The mutual fund industry continues to showcase remarkable structural stability, with the top 3 and top 8 fund houses maintaining their rankings for an uninterrupted 17th consecutive quarter. In a key development this quarter, Tata Mutual Fund made a strong comeback into the top 10 league, surpassing Mirae and DSP Mutual Fund. Meanwhile, Mirae Asset Mutual Fund slipped out of the top ten in terms of average AUM, marking a noteworthy reshuffle in the industry leaderboard.

Rising Contenders Gain Ground; Jio BlackRock Makes a Strong Debut: Tata, PPFAS, Motilal Oswal, Bajaj Finserv, and WhiteOak Capital Mutual Fund have climbed the ranks, marking strong progress over previous quarters. A major highlight this quarter was the debut of Jio BlackRock Mutual Fund, which entered the industry with an impressive average AUM of ₹12,890 crore, securing a spot near the top 30 fund houses.

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

September Fortnight Review: DIIs and MFs Lead Buying Against FPI Exit Pressure

FPI Selling Concentrated in Consumer & Power – FPIs executed sharp exits from Consumer Services (₹3,246 Cr) and Power (₹2,107 Cr), followed closely by Information Technology (₹2,014 Cr) and Realty (₹1,927 Cr). Additional pressure came from Healthcare (₹1,601 Cr), Telecommunication (₹1,505 Cr) and Oil & Gas (₹1,502 Cr), while moderate selling was seen in Construction Materials (₹1,193 Cr). The selling pattern highlights a clear retreat from consumption-heavy and defensives.

FPI Buying Anchored in Autos, Financials & Capital Goods – On the buying side, FPIs favored cyclical and growth-linked sectors, led by Automobile & Auto Components (₹1,908 Cr), Financial Services (₹1,634 Cr) and Capital Goods (₹1,518 Cr). Strong inflows also went into Metals & Mining (₹1,394 Cr), while modest accumulation was noted in Services (₹236 Cr), Construction (₹130 Cr) and Chemicals (₹23 Cr). The trend reflects a preference for sectors aligned with India’s domestic growth momentum and infrastructure cycle.

FPIs Extend Equity Selloff in September: Foreign Portfolio Investors (FPIs) continued exiting Indian equities in the first half of September, extending the selloff seen in July and August. However, the pace of outflows has moderated, with net withdrawals of ₹9,759 Cr so far this month, led by ₹10,175 Cr in secondary market selling, partly offset by ₹416 Cr in IPOs. If the trend persists, September will mark the sixth month of equity outflows in 2025, highlighting sustained caution among global investors.

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

Market Correction Drags Down MFs AUM in August: Equity MFs net AUM slipped 0.58% to ₹33.09 Lakh Cr in August from ₹33.28 Lakh Cr in July, while the overall mutual fund industry’s net AUM dipped 0.23% to ₹75.19 Lakh Cr. The decline came despite good inflows and near-record SIP contributions, as moderate market corrections weighed on valuations, ultimately capping overall asset growth.

MFs Eye Fresh Opportunities in Select IPOs: Equity mutual funds displayed strong primary-market appetite, allocating selectively to newly listed companies. Major IPO allocations included Vikram Solar (20 schemes; 2.74%), JSW Cement (19 schemes ; 4.91%), Aditya Infotech (17 schemes; 4.59%) and Bluestone Jewellery & Lifestyle, highlighting investor enthusiasm for fresh listings.

Mutual Funds Expand Portfolios with New Stock Additions: Schemes actively bought into Eternal, Clean Science & Technology, One97 Communications, Sai Life Sciences, InterGlobe Aviation, Hyundai Motor, FSN E-Commerce, Apollo Hospitals, PB Fintech and Delhivery, showcasing a broader push into technology, healthcare, auto, consumer services and financial platforms.

Funds Restructure Portfolios with Targeted Exits: On the sell side, mutual funds trimmed or exited Siemens Energy India, ABB India, PNB Housing Finance, PG Electroplast, Suzlon Energy, Hindalco, Shriram Finance, BSE, Divi’s Laboratories, SBI Cards, Eicher Motors and Prestige Estates, signalling strategic portfolio realignment.

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

Record Buying – Equity MFs Deploy Cash Aggressively: Equity mutual funds pared down their cash reserves to ₹1.98 Lakh Cr in August 2025 from ₹2.07 Lakh Cr in July, marking a clear shift towards active deployment. The cutback coincided with the calendar year’s highest monthly equity purchases of ₹64,889 Cr, underscoring fund managers’ conviction to seize opportunities created by sharp FPI selling. The move highlights a strategy of utilizing existing liquidity to strengthen market positioning.

AMC Cash Ratio Dips After July Uptick: The average cash holding ratio among the top 20 AMCs slipped to 4.82% in August, after rising to 5.94% in July and continues to stay well below the 5% mark.

PPFAS MF continues to maintain the highest cash-to-AUM ratio at 22.33% (₹26,926 Cr), highlighting its highly cautious stance. Quant MF follows with a sizable 10.72% (₹9,035 Cr), while HDFC MF holds 6.30% (₹26,494 Cr), staying well above the industry average in liquidity.

Parag Parikh & SBI Contra Lead in Cash Proportion: Parag Parikh Flexi Cap Fund continues to top the list with 22.71% of AUM in cash (₹26,129 Cr), followed closely by SBI Contra Fund at 21.57% (₹10,064 Cr), underscoring a strong liquidity stance. HDFC Flexi Cap Fund holds 11.38% (₹9,327 Cr), signalling ample readiness to deploy funds when valuations turn attractive.

Contra & Flexi Cap Funds Lead the Cash Pile: Contra Funds continue to hold the largest liquidity cushion with 16.38% of AUM in cash (₹11,486 Cr), reflecting a highly defensive stance. Flexi Cap Funds follow with 9.70% (₹48,106 Cr), indicating fund managers’ preference to keep ample dry powder to deploy during market volatility.

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