- Mutual funds increased exposure to financials, metals, and select consumption-linked stocks in January 2026
- Funds trimmed positions in oil and gas, consumer stocks, and some large-cap heavyweights
- Large-cap buying focused on banks, metals, and defensive names; selling included HDFC Bank and oil companies
Mutual funds remained selective in January 2026, increasing exposure to financials, metals and select consumption-linked names, while trimming positions in oil and gas, consumer stocks and some large-cap heavyweights. Portfolio reshuffling came even as overall equity inflows moderated from the previous month.
Equity mutual funds recorded net inflows of Rs 24,000 crore in January, compared with Rs 28,000 crore in December 2025. Excluding new fund offers (NFOs), net inflows stood at Rs 23,200 crore, down from Rs 24,500 crore in the previous month.
Sectorally, fund managers increased exposure to financials, metal and mining, and information technology stocks, signalling confidence in cyclical and growth-oriented segments. At the same time, exposure to consumer discretionary, oil and gas, and staples was reduced, pointing to profit-taking and tactical rebalancing.
Cash levels declined marginally to 4.8% of assets under management in January, compared with 4.9% in December, indicating continued deployment of funds into equities.
Here's what Mutual Funds bought and sold in the month of January.
Large-cap Activity: Buying Rotates Into Banks
In the large-cap space, mutual funds added exposure to Kotak Mahindra Bank, ITC, Power Grid, Tata Steel and ICICI Bank. The additions reflect continued preference for financials and metal companies, along with selective accumulation in defensive names such as ITC and utilities like Power Grid.
On the selling side, funds trimmed positions in HDFC Bank, ONGC, Hindalco, BPCL and Vedanta. The selling in oil and gas names such as ONGC and BPCL suggests profit-booking after recent gains, while reductions in select metals and financials point to portfolio rebalancing rather than a structural shift.
Mid-cap Activity: Selective Bets on New-age Names
Mid-cap funds increased exposure to Vodafone Idea, Biocon, Swiggy, IDFC First Bank and Yes Bank, indicating selective interest in turnaround opportunities, financials and new-age platform businesses.
Meanwhile, mutual funds reduced holdings in Bajaj Housing Finance, NALCO, REC, NMDC and Suzlon. The selling in metals and capital goods stocks suggests some moderation in cyclical exposure after strong performance in recent months.
Small-cap Activity: Financial Stocks in Focus
In the small-cap segment, funds added positions in AB Lifestyle, Sagility, Ujjivan Small Finance Bank, Bandhan Bank and SBFC Finance. The buying trend highlights continued interest in financial inclusion plays and niche growth companies.
At the same time, mutual funds pared exposure to Indian Energy Exchange (IEX), NBCC, South Indian Bank, Lemon Tree Hotels and IIFL Finance, reflecting a cautious approach toward select financials, infrastructure and consumption-linked names.
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