Major mutual funds like SBI, ICICI, and HDFC heavily adjusted portfolios in July 2026, favoring banking and diversified sectors as equity assets rose to ₹41.8 trillion. While funds rotated capital, data shows a trend of investors favoring small-cap schemes over large-cap ones, which saw net outflows.
In July 2026, the Indian stock market’s upward trend—the Nifty 50 rose 2.17%—prompted some of the country’s largest mutual fund houses to make significant changes to their investment portfolios. With domestic equity assets under management (AUM) rising 2.7% to reach ₹41.8 trillion, fund managers were actively rebalancing their holdings to align with changing sector outlooks and company valuations.
Strategic Shifts by Fund Houses
SBI Mutual Fund, managing a large pool of assets, directed significant capital into financial services and infrastructure-linked businesses. The fund house added heavily to Bajaj Finance with a purchase of ₹2,634 crore and invested ₹2,386 crore in Adani Enterprises. Simultaneously, the fund reduced its exposure to Reliance Industries, selling shares worth ₹1,016 crore, and trimmed its position in ICICI Bank by ₹890 crore.
ICICI Prudential Mutual Fund took a different approach, prioritizing banking stocks while significantly reducing its weight in the technology sector. The fund house invested ₹2,100 crore in Kotak Mahindra Bank and ₹1,400 crore in SBI. In contrast, it was a net seller of IT heavyweights, offloading ₹3,200 crore in Infosys and ₹1,800 crore in TCS. It also reduced its position in Sun Pharma by ₹2,000 crore, showing a clear shift away from those specific large-cap segments.
HDFC Mutual Fund’s strategy during the month involved a mix of Adani group exposure and specific pharmaceutical bets. The fund added ₹800 crore in Adani Enterprises and ₹900 crore in Sun Pharma. However, the fund house moved out of Bajaj Auto, selling ₹1,300 crore worth of shares, and also reduced its holding in Power Grid by ₹500 crore.
Diverging Investor Trends
These transaction patterns highlight a broader sector rotation where professional managers are booking profits in some areas while increasing bets in others. Investors should note that while the overall AUM for equity funds is growing, the trend underneath shows a clear divergence. Data for July 2026 indicates that large-cap funds experienced net outflows of ₹1,322 crore, while small-cap funds continued to attract strong investor interest, drawing in ₹7,768 crore.
This gap suggests that the market is currently navigating different paths, which can lead to increased volatility in specific pockets of the market. While mutual funds are shifting capital to capture growth or manage risk, the ongoing outflows from large-cap and value-oriented funds remain a factor to monitor. For investors, keeping an eye on these changes in fund house holdings provides insight into which sectors are currently receiving institutional backing and where funds are choosing to lighten their exposure.