Mutual funds in India retained their allocations to the pharmaceutical sector in September 2025, even as information technology and metals began to attract increased interest, according to Elara Capital’s latest Domestic Liquidity Tracker. Overall inflows into pure equity funds moderated after two months of strong growth, reflecting weaker one-year returns across most schemes.
Pharma most overowned
According to the report, Pharma has retained its top spot as the most overweight sector, holding steady at +1.0% as a percentage of AUM, unchanged from August. Fund houses including HDFC Mutual Fund (+3.3%), ICICI Prudential MF (+1.8%), and SBI MF (+0.2%) continued to maintain above-benchmark allocations to pharmaceutical names.
Auto Ancillaries and Retailing followed with overweight stances of +0.8% each, reflecting continued confidence in domestic consumption and manufacturing themes. The Information Technology sector, however saw the most change, with its overweight improving from +0.3% in August to +0.6% in October, as several fund houses increased exposure. ICICI Prudential MF (+2.5%), Mirae Asset MF (+3.2%), and Axis MF (+2.6%) were among the most active buyers, adding to large-cap IT holdings. Elara observed that “IT is gradually turning overweight,” marking the first sustained reversal in positioning since early 2024.
On the other hand, FMCG and NBFCs continued to see reduced weightings. FMCG’s underweight reduced to –1.8% in October from –1.6% in August, as high valuations and muted volume recovery led managers to book profits, even among optimism from GST reforms. NBFCs remained the most under-owned group at –1.8%, with HDFC MF (–4.1%), ICICI Prudential MF (–5.5%), and Kotak MF (–2.3%) maintaining significant underweights. Metals, while still underweight at –1.3%, showed early signs of a turnaround after improving from –1.6% in August. Select funds have begun adding exposure to steel and aluminium names amid firming commodity prices and a pick-up in industrial demand. Elara noted that “Metals remain under-owned, but alpha is beginning to emerge,” indicating rising contrarian interest.
At the fund-house level, HDFC Mutual Fund kept its strongest tilt in banks, where its overweight stood at 8.8%, driven largely by positions in ICICI Bank, Axis Bank and HDFC Bank. The fund remained sharply underweight in NBFCs (–4.1%) and the broader financials basket (–3.2%), while keeping a notable overweight in pharma (+3.3%). During the month, it added marginally to Sun Pharma and Cipla, while trimming stakes in Infosys and TCS, in line with its modest underweight on technology (–0.6%).
ICICI Prudential MF continued to back domestic cyclicals, holding overweight positions in autos (+3.0%) and insurance (+2.5%). The fund remained underweight in technology (–0.9%) and NBFCs (–5.5%), though it added selectively to Maruti Suzuki, Bajaj Auto, HDFC Life, and SBI Life during the period.
Mirae Asset MF stayed growth-biased with heavy exposure to information technology (+2.9%), auto ancillaries (+1.1%), and consumer durables (+0.8%). The AMC lifted its holdings in Infosys, LTIMindtree, and Persistent Systems, and added to Bharat Forge and Motherson Sumi. It remained underweight in NBFCs (–2.3%).
Axis Mutual Fund also kept an overweight in technology (+2.6%), led by TCS, Infosys, and Tech Mahindra, while staying underweight in FMCG (–0.7%). Axis marginally increased positions in HCL Tech and Tata Elxsi, and pared exposure in Hindustan Unilever and Nestlé India.
SBI Mutual Fund held steady overweight positions in auto ancillaries (+1.2%), PSU banks (+0.4%), and FMCG (+0.7%), while staying underweight in IT (–2.7%). The AMC added to Eicher Motors, Bosch, and Ashok Leyland, besides raising exposure to ITC, Bank of Baroda, and Canara Bank.
Kotak Mutual Fund stayed positive on capital goods (+2.6%), auto ancillaries (+1.8%), and technology (+0.7%), while continuing to be light on NBFCs (–2.3%). The fund added to Larsen & Toubro, Cummins India, and ABB India, and made smaller additions in Infosys and LTIMindtree.
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