Mutual funds net buyers in 66% stocks of Nifty 50 in May; capital goods, auto sectors see increased holdings

In the Nifty 50, mutual funds bought into 66% of constituents of May, according to MOSL’s Fund Folio. Key additions included ITC, Bharti Airtel, Bajaj Auto, and HDFC Bank. Sector allocations included Private Banks (18.4%), Technology (8.3%), Automobiles (8.2%), Capital Goods (7.5%), and Healthcare (7.3%).

Funds were also net buyers in 59% of Nifty Midcap 100 stocks, led by additions in Hindustan Zinc, Paytm, SAIL, and Mazagon Dock. Exits were seen in Nykaa, ACC, and Max Healthcare.

In the Nifty Smallcap 100, funds increased holdings in 58% of the stocks. Top buys included Sagility India, Chambal Fertilisers, KFin Technologies, and PNB Housing. Exits included Hindustan Copper, Mahanagar Gas, and IRCTC.

Among specific stocks, Larsen & Toubro (Rs 8,950 crore), HDFC Bank (Rs 8,920 crore), ITC (Rs 6,660 crore), Bharat Electronics, and Eternal saw maximum buys from MFs. Other stocks bought included ITC, Bharti Airtel, JSW Steel, and Apollo Hospitals were added, On the other hand  Cipla, ONGC, Ultratech Cement, and NTPC witnessed selling.

Sector watch

Compared with sector weights in the BSE 200 index, mutual funds remained underweight in several key segments. The Consumer sector was under-owned by 18 funds, followed by Oil & Gas (17), Private Banks (16), and Technology and Utilities (11 each).  On the other hand, Healthcare was the most over-owned sector, with 17 funds holding positions higher than their BSE 200 weight. Capital Goods and Chemicals followed with 10 funds each, while Retail and Consumer Durables were over-owned by 9 funds.

Cyclical sectors find buyers

Indian mutual funds increased exposure to Capital Goods, Automobiles, NBFCs, and Infrastructure, while trimming allocations to Private Banks, Healthcare, and Consumer sectors during the month of May.  During the month, the mutual fund industry’s total assets under management (AUM) rose to a record Rs 72.2 lakh crore in May 2025, reflecting a 3.1% month-on-month (MoM) growth.  However, net equity inflows fell to Rs 20,100 crore in May—the lowest since December 2023—down from Rs 25,800 crore in April, the report noted. Among fund houses, Motilal Oswal MF led equity AUM growth at around 12.5% MoM.

Mutual funds significantly raised their allocations to cyclical and industrial sectors. The report notes that Capital Goods sector’s weight increased to 7.5 percent in May, up 60 basis points MoM, making it the fourth-largest in sector allocations. Within the segment, stocks like Larsen & Toubro and Bharat Electronics saw strong increases in holding value, rising by Rs 8,950 crore and Rs 6,240 crore respectively.

Automobiles also gained for the second straight month, with its weight rising to 8.2% (around 20 basis points MoM). Within the segment, fund managers accumulated positions in names like Tata Motors, Hero MotoCorp (up Rs 1,230 crore), and Bajaj Auto (up Rs 1,420 crore).

Other segments that saw gains included NBFCs, Chemicals, and Infrastructure.

On the other hand, stakes were reduced in private banks, healthcare, and utilities. According to the report, private banks, which continues to be the largest sectoral holding, saw a 50 bps MoM drop in weight to 18.4 percent. The segment had seen a 20-month high in holdings in April. Healthcare too saw a decline in weight to 7.3%, which is its lowest level in eight months. Similarly, Utilities fell to 3.9% which is a 20-month low.

Other sectors with reduced holdings included Oil & Gas, Consumer, Telecom, Retail, Cement, and Consumer Durables.

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