Domestic mutual funds in India made significant portfolio adjustments in May, rotating capital towards India-focused growth themes. This shift saw increased allocations to banking, consumption, and industrial stocks, while exposure to export-oriented sectors like IT, metals, and Public Sector Undertakings (PSUs) was notably reduced.
According to a YES Securities report, the month was characterized by fund managers aggressively buying into select financial and consumer-facing companies. This move signals a strong conviction in domestic growth opportunities amidst evolving market conditions.
Top Mutual Fund Buys in May
- ICICI Bank: The largest beneficiary, seeing inflows of ₹4,427 crore.
- Gujarat State Petronet
- Lenskart
- HDFC Bank
- Groww
- Reliance Industries (RIL)
- JSW Energy
- Adani Enterprises
- Life Insurance Corporation (LIC)
- Kotak Mahindra Bank
Key Mutual Fund Sells in May
Conversely, mutual funds trimmed their positions in several prominent companies, predominantly from the IT, metals, and PSU sectors. This divestment reflects a strategic reduction in holdings that were previously favored.
- Infosys
- Wipro
- Vedanta
- GVT&D
- Larsen & Toubro (L&T)
- MCX
- Lupin
- Hindalco
- NTPC
- Bharat Electronics (BHEL)
Broader Market Trends
The report also highlighted a broader market shift, with midcap and smallcap stocks gaining significant traction. Their weight in the Nifty-500 index reached cycle highs, supported by robust cash market activity and increased trading volumes. This growing participation from mid- and small-cap segments, coupled with rising institutional ownership, suggests a potential for the next phase of the Indian equities upcycle.
Foreign Institutional Investors (FIIs) and Domestic Institutional Investors (DIIs) have also steadily increased their exposure to the mid- and small-cap segments, moving away from a traditional large-cap preference. This alignment of domestic and foreign flows is providing substantial support for sustained participation in these segments, reflecting growing confidence in India’s broader earnings landscape.