Mutual funds turned more selective in March 2026, increasing exposure to healthcare, IT and telecom-related stocks, while sharply trimming holdings in financials, automobiles and industrials. The portfolio reshuffle came alongside a surge in equity inflows and a marginal reduction in overall cash levels, signalling higher risk appetite and active deployment by fund managers.
Actively managed equity mutual funds recorded net inflows of Rs 40,450 crore in March, the highest since July 2025, compared to Rs 25,978 crore in February, according to data released by the Association of Mutual Funds in India (AMFI).
On a sectoral basis, mutual funds raised exposure to healthcare by 47 bps, the highest increase during the month. IT saw an allocation increase of 36 bps, while telecom and media gained 24 bps. Utilities also saw a notable uptick of 22 bps, indicating a tilt towards defensive and growth-linked segments.
In contrast, financials witnessed the steepest reduction, with exposure cut by 99 bps. Automobiles and ancillary stocks saw a 40 bps decline, while industrials and building materials were pared by 14 and 7 bps respectively, reflecting moderation in cyclical bets.
Large-Cap Activity: Banks and Telecom Bought
In the large-cap segment, mutual funds increased holdings in HDFC Bank, Kotak Mahindra Bank, Bharti Airtel, ICICI Bank and Eternal. The buying highlights renewed confidence in private sector banks and continued preference for telecom as a structural growth play.
On the selling side, funds reduced exposure to Power Grid Corporation, Samil, IOCL, BPCL and Tata Steel. The trimming of oil and gas names points to profit booking, while reductions in metals reflect caution after recent rallies.
Here's what Mutual Funds bought and sold in the month of March.
Mid- and Small-Caps: Selective Bets Continue
Mid-cap funds added exposure to Yes Bank, Suzlon, Groww, V-Mart and NTPC Green, indicating interest in turnaround stories, retail-focused businesses and clean energy themes. Meanwhile, holdings in Petronet LNG, NALCO, HPCL, JSW Energy and NHPC were pared.
In the small-cap space, mutual funds bought Urban Company, Ujjivan Small Finance Bank, Sagility, Manappuram Finance and Inox Wind. Selling was seen in Sammaan Capital, SBFC Finance, EaseMyTrip, Motherson Wiring and Crompton Greaves Consumer.
Cash Levels Dip
Overall cash levels across equity-oriented schemes declined by 11 basis points in March, underscoring stronger equity deployment amid rising inflows. Flexi-cap funds led category-wise inflows, followed by small-cap and mid-cap funds, reinforcing the appetite for diversified and growth-oriented strategies.
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