MFs increase holdings in NBFCs and retail but reduce private bank, auto and oil & gas exposure

Mutual funds were net buyers in 48 percent of Nifty 50 stocks, 56 percent of Nifty Midcap 100 stocks, and 65 percent of Nifty Smallcap 100 stocks.

Mutual fund sectoral allocations from May to June 2025 shows rising preference for NBFCs, Retail, and Consumer Durables, according to Motilal Oswal Financial Services' Fund Folio.

Indian mutual funds continued to rebalance their portfolios in June 2025, marking a notable shift from allocations seen in May. The latest Fund Folio data shows that fund managers raised their exposure to NBFCs, Retail, Consumer Durables, Healthcare, and Telecom, while trimming weights in Private Banks, Automobiles, Technology, Oil & Gas, and Consumer.

Equity assets under management (AUM) rose 4.3 percent month-on-month to Rs 36.6 trillion in June, driven by a 3.1 percent rally in the Nifty and a pick-up in net equity inflows, which rose to Rs 246 billion from Rs 201 billion in May. The month also saw a new high in SIP inflows, underscoring sustained retail participation, the report noted.

Private Banks, which is the largest mutual fund sector holding, saw its weight drop for the second consecutive month, from 18.4 percent in May to 17.9 percent in June, after peaking at 18.9 percent in April. While still dominant in absolute terms, mutual fund exposure to the sector now lags its 20.8 percent weight in the BSE 200 index, making it one of the most significantly underweight sectors, the report noted adding that technology too remained under pressure, with its allocation falling to a one-year low of 8.1 percent in June from 8.3 percent the previous month, well below its BSE 200 representation of 9.3 percent.

On the other hand, consumption-linked sectors saw increased traction. NBFCs rose to 5.6 percent from 5.3 percent, Retail climbed to an all-time high of 2.9 percent from 2.6 percent, and Consumer Durables jumped to 2.5 percent from 2.1 percent. Healthcare gained around 7.4 percent, while Telecom touched a 59-month high at 3.5 percent.

Allocations across indices

Mutual funds were net buyers in 48 percent of Nifty 50 stocks, 56 percent of Nifty Midcap 100 stocks, and 65 percent of Nifty Smallcap 100 stocks. In the Nifty 50, stocks like Bharti Airtel, Asian Paints, Reliance Industries, and HDFC Bank saw increased MF holdings, while Infosys and HCLTech witnessed selling. In the Midcap 100, fund managers added to Vishal Mega Mart, REC, Jindal Stainless, and APL Apollo, while trimming exposure to Trent and Persistent Systems.

In the Nifty Smallcap 100, mutual funds increased holdings in Linde India, Balrampur Chini, Lux Industries, KSB, and Bank of Maharashtra. On the other hand, fund exposure declined in stocks such as Nazara Technologies, Dalmia Bharat Sugar, and Tejas Networks.

Sectors that are over-owned by at least 1% (compared to BSE 200) included Healthcare (with 16 funds overweight), Consumer Durables (12 funds), Chemicals (11 funds), Capital Goods (9 funds), and Retail (8 funds). On the other hand, sectors with at least 1% under-ownership included Consumer (18 funds underweight), Oil & Gas (17 funds), Private Banks (16 funds), Technology (13 funds), and Utilities (11 funds).