In a notable shift in portfolio strategy, large and midcap mutual funds substantially ramped up their investments in metal stocks during June 2026, concurrently divesting from banking shares. This reallocation signifies a clear sector rotation towards commodity-linked businesses, according to data compiled by FinAlpha from the portfolios of the top eight large and midcap mutual funds.
Metals Emerge as Top Sectoral Gainers
The non-ferrous metals sector experienced the highest net inflows, attracting ₹1,532 crore in June, making it the primary beneficiary of mutual fund capital. Ferrous metals followed closely, securing inflows of ₹803 crore. This strong interest in metals underscores a broader trend towards manufacturing and infrastructure-related industries.
Other sectors also saw increased allocations, including Petroleum Products (₹464 crore), Automobiles (₹463 crore), Capital Markets (₹356 crore), Industrial Products (₹348 crore), Telecom Equipment (₹305 crore), and Cement & Cement Products (₹302 crore).
Banks Bear the Brunt of Outflows
Conversely, the banking sector recorded the largest net outflows, with funds pulling ₹2,180 crore. This made financials the biggest casualty of the month's portfolio reshuffle. Retailing and Textiles & Apparel also faced significant selling pressure, with outflows of ₹548 crore and ₹392 crore, respectively.
Vedanta Aluminium, Sterlite Technologies Among Top Stock Picks
At the individual stock level, Vedanta Aluminium Metal Ltd. received the highest fresh investment, with fund managers deploying ₹717 crore. Sterlite Technologies was another major beneficiary, attracting ₹329 crore. Maruti Suzuki India also saw substantial additions totaling ₹307 crore, alongside Reliance Industries (₹262 crore) and Bharat Electronics (₹248 crore).
Key Fresh Buys and Reductions
- Top Fresh Buys: Hindalco Industries (₹664 crore), Jindal Steel (₹550 crore), Multi Commodity Exchange of India (MCX) (₹452 crore). Other fresh positions included UltraTech Cement, Muthoot Finance, APL Apollo Tubes, Tata Steel, National Aluminium Company (NALCO), Vedanta, and JSW Steel.
- Biggest Reductions: HDFC Bank witnessed the largest reduction in exposure, with mutual funds trimming holdings worth ₹1,200 crore. Axis Bank followed with sales of ₹516 crore. Other stocks experiencing significant reductions included Page Industries (₹415 crore), FSN E-Commerce Ventures (Nykaa) (₹380 crore), and HDFC Asset Management Company (₹307 crore). Funds also made complete exits from Avenue Supermarts, Kalpataru Projects International, and Voltas.
Overall, large and midcap funds were net buyers of ₹9,823 crore during June, increasing exposure to 97 stocks and making 40 fresh purchases, indicating active sector rotation rather than a slowdown in equity deployment.