mutual fund flows

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.

Equity Mutual Funds Scale New Peak at ₹32.05 Lakh Cr – Equity mutual funds extended their rally in May, posting a robust 4.83% rise in Net AUM to a record ₹32.05 Lakh Crs. Fueled by sharp gains in broader markets and record SIP inflows, the surge reflects rising investor confidence and bullish sentiment.

Mutual Funds Load Up on Swiggy, DLF, K.P.R Mill & More – In May, mutual funds expanded their portfolios with fresh additions including Swiggy, DLF, KFin Technologies, K.P.R. Mill and PNB Housing Finance. Other notable picks were Bajaj Auto, Divi’s Laboratories, ITC, Tata Steel, InterGlobe Aviation, HAL, BHEL and HPCL—reflecting a diverse investment approach across sectors.

MFs Exit REC, Blue Star, IndusInd Bank & More – May saw mutual funds trimming exposure in several key stocks, with exits from REC, Blue Star, PFC, IndusInd Bank and BSE. Other notable sell-offs included Sun Pharma, Kotak Mahindra Bank, Bajaj Finserv, NTPC, Tata Motors, Muthoot Finance, ITC Hotels, United Breweries and SRF—indicating portfolio realignment amid shifting market dynamics.

Midcap Moves: MFs Sell Nykaa & Dixon, Buy HPCL & BHEL – May saw mutual funds offloading several midcap names including Nykaa, Max Financial Services, Indian Hotels, GE Vernova T&D India, Dixon Technologies, Coforge, Concor and IndusInd Bank. On the flip side, HPCL and BHEL attracted fresh buying interest, marking a tactical shift in midcap allocations.

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

The Mutual Fund industry’s average AUM surged to an all-time high of ₹72.18 lakh crore in May 2025, up 3.86% from ₹69.50 lakh crore in April.

Equity-oriented mutual fund inflows fell for the fifth straight month to ₹19.01k cr —the lowest in a year. Yet, the category extended its winning streak to 51 consecutive months of net inflows.

Net inflows into hybrid funds jumped sharply in May, led by rising interest in Arbitrage Funds. The shift highlights investor preference for low-risk strategies amid equity market volatility and geopolitical concerns.

Inflows into other ETFs declined sharply, whereas Gold ETFs saw robust interest with inflows of ₹292 crore.

Despite net redemptions of ₹15,913 crore, the average AUM of debt mutual funds remained steady with a slight rise of 0.25% in May.

Corporate Bond Funds witnessed a sharp surge in inflows, rising by 469%.

SIP inflows rose marginally to a fresh all-time high of ₹26,688 crore in May, underlining steady retail participation and long-term investment commitment.

A total of 19 new schemes were launched in May, collectively mobilizing ₹4,170 crore.

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

FPIs Shift Gears in May: Favour Telecom, Services & Capital Goods; Exit IT, Power & Healthcare

Sectors That Attracted FPI Flows

• Telecom, Services & Capital Goods Lead the Pack: FPIs showed strong bullishness in Telecommunication (₹8,089 Cr), Services (₹7,972 Cr), and Capital Goods (₹5,327 Cr)—with most flows concentrated in the second half of May, driven by optimism in digital infrastructure, outsourcing and industrial growth.
• Financials, Oil & Gas, and Chemicals Draw Steady Interest: Financial Services saw ₹4,028 Cr in net inflows, despite second-half profit-taking. Oil & Gas attracted ₹2,520 Cr, while Chemicals drew ₹1,308 Cr, signaling interest in core economy and energy-related sectors.
• Recovery Noted in FMCG & Construction Materials: After a weak start, FMCG reversed losses to close with ₹815 Cr in net buying. Construction Materials received ₹575 Cr, indicating a slow but steady accumulation.

Sectors Facing the Heat

• FPIs reduced their exposure in defensive and interest-rate sensitive sectors. Healthcare led the outflows with ₹2,614 Cr, followed by Power (₹2,494 Cr) and Information Technology (₹2,436 Cr).
• Consumer Durables, Realty, and Consumer Services also saw net selling between ₹491 Cr and ₹1,734 Cr.
• Smaller sectors like Textiles, Diversified and Construction Services witnessed minimal activity.

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

FPI Buying Spree in Early May 2025– Financials, Infra & Energy in Focus: Foreign investors turned selectively positive in early May, infusing over ₹17,570 Cr into Indian equities. The lion’s share went to Financial Services (₹4,728 Cr), followed by strong allocations to Capital Goods (₹2,233 Cr), Oil & Gas (₹2,130 Cr) and Services (₹1,762 Cr). Auto, Telecom and Chemicals also saw steady inflows, indicating preference for domestic cyclical and infrastructure plays.

FPI Selling in First Half of May 2025 – Defensive & Real Assets Witness Outflows: Despite select inflows, FPIs exited defensives like FMCG (₹1,057 Cr), Healthcare (₹606 Cr) and Consumer Durables (₹622 Cr). Realty and Power too saw selling of ₹842 Cr and ₹720 Cr respectively.

FPIs Turn Steady Buyers Since Mid-April; Debt Sees Continued Outflows: Foreign Portfolio Investors infused ₹12,873 Cr into Indian equities in the first half of May, extending their buying streak that began on April 15th. Remarkably, they have been net buyers on 20 out of 21 trading sessions, accumulating a total of ₹56,770 Cr since April 15, with strong focus on financials and capex themes. However, the debt segment witnessed an outflow of ₹6,311 Cr, likely due to rising U.S. bond yields and profit-booking in Indian fixed income instruments.

FPI AUC Rises Sharply in First Half of May 2025, Driven by Equity Gains – In the first half of May 2025, Foreign Portfolio Investors’ Assets Under Custody (AUC) rose to ₹78.06 Lakh Cr, up from ₹75.72 Lakh Cr in April, marking a robust monthly increase of ₹2.34 Lakh Cr.

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

Equity Mutual Funds Play Safe with ₹2.3 Lakh Cr Cash Buffer: India’s equity mutual funds continue to adopt a cautious stance, with cash reserves hovering above ₹2.3 Lakh Cr as of April 2025 — sustaining one of the highest liquidity cushions in recent years. Despite intermittent market rallies, AMCs are holding back on aggressive equity allocations, signalling a preference for dry powder amid global and domestic headwinds.

Average Cash Holding Edges Higher Again: The average of cash holding ratio among the top 20 AMCs ticked up further to 6.53% in April, compared to 6.03% in March, extending the cautious momentum.

PPFAS MF leads with the highest cash holding ratio of 23.57%, driven by its cautious flexi-cap strategy. Motilal Oswal MF and Quant MF follow with 14.50% and 13.05%, also maintain sizable liquidity buffers. Large players like SBI MF, HDFC MF and ICICI Pru MF lead in absolute cash holdings — SBI MF alone holds over ₹38,000 Cr in cash.

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 lead with the highest cash holding at 17% of AUM, signaling a highly cautious stance, followed by Flexi Cap (10.89%) and Focused Funds (9.39%), reflecting flexible allocation strategies. Small Cap Funds also maintain a notable 8.80% cash buffer to guard against volatility-driven corrections.

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