Mutual Funds Raise Stakes In Private Banks, Cut Exposure To PSU Stocks In March Quarter

Domestic mutual funds increased their holdings in private sector banks and select large-cap companies during the March 2026 quarter, while reducing exposure to several PSU and commodity-linked stocks, according to data released by Prime Infobase.

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This occurred at a time when the performance of the Indian equity market had been relatively weak. The Nifty 50 fell by about 15% while the Sensex index fell by approximately 13% between January and March 2026.

Total sectoral holdings by the mutual funds went down from ₹52.27 lakh crore in the December 2025 quarter to ₹46.64 lakh crore in the March 2026 quarter, indicating a fall of ₹5.62 lakh crore.

Financial services continued to be the dominant sector despite falling in value. Holdings in the sector fell from ₹16.30 lakh crore to ₹14.58 lakh crore, a drop of ₹1.71 lakh crore. The sector accounted for 31.27% of total mutual fund assets at the end of the quarter.

Consumer discretionary holdings declined by ₹1.25 lakh crore to ₹8.09 lakh crore, while information technology holdings fell by ₹0.84 lakh crore to ₹3.12 lakh crore.

Private Banks See Higher Allocation

HDFC Bank emerged as the biggest accumulation among mutual funds during the quarter. Holdings in the bank increased from 355.30 crore shares to 393.97 crore shares, an addition of 38.66 crore shares. The stock declined by around 26% during the same period.

Mutual funds also raised exposure to ICICI Bank, where holdings increased by 12.70 crore shares to 199.28 crore shares. Kotak Mahindra Bank saw an increase of 23.74 crore shares, with holdings rising to 234.39 crore shares.

Buying activity extended to other large-cap stocks as well. Infosys witnessed an increase of around 5.91 crore shares in mutual fund holdings, while Bharti Airtel saw additions of about 4.06 crore shares.

Reliance Industries recorded incremental buying of approximately 3.44 crore shares. Mutual funds also added exposure to InterGlobe Aviation, Bharat Heavy Electricals, and PB Fintech during the quarter.

Selling Seen In PSU, Commodity Stocks

Mutual fund investments were cut in certain PSU stocks and also in commodity-oriented businesses in the third quarter of March.

State Bank of India recorded a decrease in mutual fund investments by a margin of 125.91 crore to 121.60 crore, resulting in a net sale of about ₹4,721 crore. Commodity-oriented businesses such as Vedanta and Hindalco Industries also saw selling activity.

By values, the energy and utilities business witnessed the largest increase in mutual fund investments. NTPC recorded an increase of around ₹5,129 crore in portfolio value, followed by Coal India at ₹4,228 crore and Oil and Natural Gas Corporation at nearly ₹2,475 crore.

Prime Infobase data showed that mutual fund holdings increased in 579 companies during the quarter. In companies where holdings increased, average stock prices declined 14.83%. In 465 companies where holdings were reduced, average prices fell 17.59%.

Among fund houses, SBI Mutual Fund remained the largest equity investor with holdings worth ₹7.85 lakh crore as of March 31, 2026. ICICI Prudential Mutual Fund and HDFC Mutual Fund followed in terms of total equity holdings.