Mutual fund's AUM surpasses Rs 70 lakh cr amid market shifts, AMCs raise stakes in private banks, oil & gas
India’s mutual fund industry has achieved a significant milestone, surpassing Rs 70 lakh crore in assets under management (AUM) for the first time in April 2025. This achievement is primarily attributed to substantial gains in liquid and equity funds, as reported by Motilal Oswal Financial Services.
The surge in AUM represents a 6.5% month-on-month increase, with liquid funds contributing Rs 1.56 lakh crore and equity funds adding Rs 1.21 lakh crore to the total. Despite this growth, equity inflows have decreased for the fourth consecutive month, indicating investor caution amidst high valuations and global market uncertainties. Instead, systematic investment plan (SIP) inflows have reached record highs, illustrating robust retail participation.
Rising stakes
The composition of mutual funds has evolved, with significant investments in sectors like private banks, oil & gas, automobiles, and consumer goods. These changes reflect strategic adjustments in response to market dynamics. The weightage of private banks has risen to an 18.9% allocation, marking a 20-month high and an increase of approximately 50 basis points month-on-month.
Similarly, the oil & gas sector has seen a rise for the second consecutive month, achieving an eight-month high allocation of 6.4%. In contrast, technology stocks have experienced a reduction in interest, with the sector’s weight dropping to 8.3%, continuing a three-month decline.
Sectoral allocations reveal that healthcare remains the most over-owned sector, with 17 funds holding more than index weights. Other sectors such as capital goods, retail, and chemicals also demonstrate overweight positions.
Conversely, consumer sectors remain under-owned, with 19 funds showing less interest relative to their index weights. The oil & gas and private banking sectors also appear under-owned, with 17 and 15 funds, respectively, allocating fewer resources than indices suggest.
Banking stocks
Banking stocks have notably increased in value, with HDFC Bank recording the highest month-on-month gain of Rs 15,700 crore. ICICI Bank, Axis Bank, and IndusInd Bank also saw notable increases in fund value. On the downside, stocks like Siemens, Larsen & Toubro, and Infosys have faced declines, with Siemens recording a drop of Rs 3,440 crore. These shifts indicate a reallocation of resources within the mutual fund industry, driven by changing market conditions and investor sentiment.
Market momentum remains a key driver for mutual funds, with the Nifty index gaining 3.5% in April, marking the second consecutive monthly rise and the second-best performance in nine months. However, the industry continues to navigate global economic uncertainties, influencing investment strategies and sectoral weightings. AMCs have responded by bolstering stakes in industries like retail, insurance, chemicals, and real estate, while reducing exposure to capital goods, NBFCs, utilities, and metals.