Mutual Funds Trim Stakes In Over 60 Companies For Fourth Straight Quarter Despite Steady Equity Inflows

The mutual funds cut their stakes in more than 60 listed firms for the fourth consecutive quarter in the June 2026 quarter, despite the fact that the sector continued to remain a net buyer of Indian equities.

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The latest June quarter shareholding disclosures show that mutual funds lowered their exposure across companies spanning power, financial services, infrastructure, healthcare, manufacturing and consumer sectors. NTPC share price, REC share price, LIC share price, Grasim Industries share price and Cummins India share price are among the stocks where mutual fund ownership declined over the past four quarters.

Stake Reductions Seen Across Multiple Sectors

The list of companies witnessing four consecutive quarters of stake cuts includes LIC, NTPC, Grasim Industries, Larsen & Toubro (L&T), Cummins India, GE Vernova T&D India, REC, NLC India, Mahindra & Mahindra Financial Services, Star Health, Nuvoco Vistas, Zee Entertainment Enterprises, Religare Enterprises, Texmaco Rail & Engineering, Bharat Rasayan and SpiceJet, among others.

The reductions came even though domestic institutional investors continued absorbing selling by foreign institutional investors (FIIs) over the past year.

Stanley Lifestyles Records Sharpest Decline

Among the companies reviewed, Stanley Lifestyles recorded the steepest fall in mutual fund ownership. Holdings declined to 10.2% in the June 2026 quarter from 20.4% a year earlier, a reduction of more than 10 percentage points. During the same period, the stock declined 56%.

There were large declines in the mutual fund investments in Shivalik Bimetal Controls and GE Vernova T&D India too. Fund ownership in Shivalik Bimetal Controls fell by 9.8 percentage points to 9.81%, while GE Vernova T&D India saw its mutual fund stake decline by 8.8 percentage points to 14.7%. Despite the reduction, the two stocks gained 36% and 110%, respectively, over the same period.

Other companies where mutual funds reduced their holdings by roughly 5 to 7 percentage points across four quarters included TeamLease Services, Apollo Pipes, Dee Development Engineers, Zee Entertainment Enterprises, KNR Constructions, STL Networks, JNK India, Gateway Distriparks, Route Mobile, Wheels India, Greenlam Industries and SP Apparels.

Portfolio Rebalancing Continues Amid Strong Inflows

According to Kranthi Bathini, Director of Equity Strategy at WealthMills Securities, speaking to Moneycontrol, mutual funds periodically rebalance portfolios to align with scheme objectives, valuation changes, relative performance and the availability of better investment opportunities over the medium to long term.

Despite the selective reduction in holdings, domestic mutual funds remained significant buyers of equities. Between June 2025 to date, they have put in about ₹5.5 lakh crore into Indian shares, whereas FIIs have pulled out close to ₹3.86 lakh crore in the same period.

Mutual funds, on their part, had some cash left over to deploy in the June quarter, having maintained a relatively cautious approach in deploying it in the previous month. SIP inflows and the recently witnessed market correction created some new avenues for deploying money into select sectors.

Valuations Remain an Important Factor

Indian equity indices have shown varied performances in the past one year. Since June 2025 to date, Sensex is down by more than 8.5%, whereas Nifty is down by over 6.5%.

The BSE 150 MidCap Index has gained 2.5%, whereas the BSE 250 SmallCap Index has slipped about 1%.

G. Chokkalingam of Equinomics Research told Moneycontrol that elevated valuations and sector-specific challenges were among the factors influencing mutual fund decisions. He noted that companies linked to agriculture could face pressure from weaker rainfall, airline businesses remain sensitive to higher crude price, and certain fundamentally strong companies are trading at premium valuations, prompting fund managers to rebalance their portfolios rather than reduce overall exposure to equities.