Mutual Funds Post Strong Quarterly Returns Amid Bank and PSU Stock Gains

Mutual Funds Shift Exposure Amid Market Weakness

Domestic mutual funds adjusted their portfolios in response to the weakening equity markets and sectoral corrections in the March 2026 quarter. Data from Prime Infobase reveals that the Nifty 50 fell by around 15 percent, while the Sensex was down by 13 percent during this period.

The total holdings across sectors declined from Rs 52.27 lakh crore to Rs 46.64 lakh crore, a drop of Rs 5.62 lakh crore. This marked a 10.7% reduction in total holdings. The financial services sector experienced the steepest reduction, with holdings falling from Rs 16.30 lakh crore to Rs 14.58 lakh crore (down Rs 1.71 lakh crore). Despite this decline, the sector remained the largest at 31.27% of total assets.

Holdings Decline Across Sectors

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The largest accumulation was seen in HDFC Bank, where holdings rose from 355.30 crore shares to 393.97 crore shares, an increase of 38.66 crore shares. During the period, the stock fell by around 26%. Similarly, in ICICI Bank, holdings increased from 186.58 crore shares to 199.28 crore shares, up 12.70 crore shares, while Kotak Mahindra Bank saw a rise from 210.65 crore shares to 234.39 crore shares, an addition of 23.74 crore shares.

Beyond banking, mutual funds also added selectively to large-cap names in IT and telecom. Infosys saw higher allocations, with holdings rising by about 5.91 crore shares, while Bharti Airtel witnessed accumulation, with mutual funds adding around 4.06 crore shares during the quarter. Buying was also seen in Reliance Industries, where holdings increased by about 3.44 crore shares, alongside additions in InterGlobe Aviation (around 1.27 crore shares) and Bharat Heavy Electricals (about 14.05 crore shares).

On the selling side, exposure was reduced in several PSU and commodity-linked names. For example, in State Bank of India, holdings fell from 125.91 crore shares to 121.60 crore shares, a decline of 4.31 crore shares, resulting in net selling of Rs 4,721 crore. Selling was also seen in commodity-linked names like Vedanta and Hindalco Industries.

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In value terms, energy and utilities saw the sharpest increase in mutual fund holdings, led by NTPC with an increase of about Rs 5,129 crore, followed by Coal India with around Rs 4,228 crore, and Oil and Natural Gas Corporation with roughly Rs 2,475 crore addition.

Overall, mutual fund holdings increased in 579 companies, while average stock prices fell 14.83%. In 465 companies where holdings were reduced, prices declined more sharply by 17.59%, reflecting broad-based market weakness across sectors.

At the institutional level, SBI Mutual Fund remained the largest equity investor with Rs 7.85 lakh crore in holdings as of March 31, 2026, followed by ICICI Prudential Mutual Fund and HDFC Mutual Fund.