Mutual Funds pump Rs 56,500 cr into equities in July; IT, PSU banks lead buying spree

Equity mutual funds in India staged a sharp rebound in July 2025, with net inflows (excluding arbitrage schemes) surging 80% month-on-month (MoM) to Rs 56,500 crore ($6.5 billion), according to JM Financial’s India MF Monthly Flow Tracker. The rise comes after a 30% MoM increase in June, signalling renewed investor confidence.

Core equity, thematic funds power gains

Core equity schemes drew Rs 42,700 crore in July, up 81% MoM, while thematic funds saw an extraordinary jump to Rs 9,400 crore from just Rs 500 crore in June. Equity NFOs contributed significantly, mobilising Rs 10,880 crore — almost 12 times June’s Rs 930 crore. Arbitrage funds, however, saw inflows halve to Rs 7,300 crore from Rs 15,600 crore in June. All core categories registered stronger flows except ELSS funds, which recorded outflows.

Sector shifts

Mutual funds showed a decisive tilt towards software services, PSU banks, and private banking names in July, while cutting exposure to aviation, cement, and select commodity-linked sectors.

Software & Services topped purchases at Rs 1,60,986 million, led by IT majors Infosys, TCS, HCL Tech, Tech Mahindra, and Info Edge. Smaller players like LTIMindtree, Birlasoft, and Intellect Design saw selling.

PSU Banks followed with Rs 1,13,499 million in net buying, focused on SBI, Canara Bank, Indian Bank, Bank of Maharashtra, and Bank of Baroda, with trimming in Union Bank, Bank of India, and PNB.

Private Banks added Rs 1,03,314 million, favouring Axis Bank, Kotak Mahindra Bank, ICICI Bank, AU Small Finance Bank, and RBL Bank, while HDFC Bank, IndusInd Bank, and DCB Bank saw reduced holdings.

NBFCs saw Rs 78,184 million in buys, led by HDB Financial Services, Cholamandalam Investment, Bajaj Finance, L&T Finance, and 360 One Wam. Power Finance Corp, BSE, and MCX faced selling pressure.

Other heavily bought sectors included:

Capital Goods (Rs 45,163 mn): CG Power, BEL, HAL, PG Electroplast, Havells

Auto & Auto Components (Rs 43,713 mn): M&M, Maruti Suzuki, Sona BLW, Hero MotoCorp, Bharat Forge

Pharma & Healthcare (Rs 41,118 mn): Anthem Biosciences, Lupin, JB Chemicals, Laurus Labs, Sai Life Sciences

Realty (Rs 37,166 mn): Oberoi Realty, Lodha, The Phoenix Mills, Marathon Nextgen, Godrej Properties

Consumer (Rs 25,268 mn): ITC, Godrej Consumer, Britannia, Devyani International, Adani Wilmar

Consumer Durables (Rs 17,039 mn): Dixon, Voltas, Amber, Blue Star, Crompton Greaves

What was sold aggressively

The biggest sectoral outflow was in Ports & Logistics (-Rs 21,234 mn), with exits from Interglobe Aviation, Container Corp, Cochin Shipyard, Mahindra Logistics, and Aegis Vopak. Other notable sell-offs:

Cement (-Rs 20,072 mn): ACC, Grasim, Ambuja, JK Cement, JK Lakshmi Cement

Agro/Petrochemicals (-Rs 11,825 mn): Solar Industries, UPL, Aarti Industries, Chambal Fertilisers, Paradeep Phosphates

AMC NBFCs (-Rs 10,070 mn): HDFC AMC, Nippon AMC

Metals & Mining (-Rs 9,158 mn): Hindalco, Hindustan Copper, SAIL, Ratnamani Metals, NALCO

Utilities (-Rs 8,811 mn): NTPC, IEX, Siemens Energy, Tata Power, Torrent Power

Coal (-Rs 7,664 mn): Coal India

Media (-Rs 3,377 mn): Zee, PVR Inox, TV Today, Saregama, Jagran

Telecom Services (-Rs 2,828 mn): Airtel, Indus Towers, Tejas Networks

Ceramics/Plyboards/Glass (-Rs 1,868 mn): Kajaria, Pokarna, Greenply, Greenlam, Somany

Stock-level highlights

Top additions included SBI (Rs 103,689 mn), Infosys (Rs 57,011 mn), TCS (Rs 43,003 mn), HDB Financial (Rs 41,654 mn), Reliance (Rs 41,029 mn), Axis Bank (Rs 38,297 mn), Kotak Mahindra Bank (Rs 31,606 mn), HCL Tech (Rs 28,149 mn), M&M (Rs 27,766 mn), and Anthem Biosciences (Rs 26,245 mn).

Biggest reductions came in Interglobe Aviation (-Rs 23,358 mn), Eternal (-Rs 15,945 mn), HPCL (-Rs 9,809 mn), Hindalco (-Rs 9,597 mn), NTPC (-Rs 9,285 mn), ACC (-Rs 8,590 mn), HDFC AMC (-Rs 8,115 mn), Solar Industries (-Rs 7,961 mn), Coal India (-Rs 7,664 mn), and Sun Pharma (-₹7,554 mn).

SIP momentum

SIP inflows hit Rs 28,500 crore ($3.3 billion) in July, while total SIP AUM stood at ₹15.2 lakh crore ($173 billion), down 0.7% MoM due to ~3% negative market movement. Outstanding SIP accounts reached a record 94.5 million, with 6.9 million new registrations but 4.3 million closures — meaning 63% of new accounts replaced discontinued ones. Total active SIP accounts rose to 91.1 million from 86.5 million in June.

JM Financial pegs the Nifty PE at 22.0x FY26E and 19.1x FY27E, with ROE improving from 15.4% to 16.3%. Bloomberg’s estimates are slightly lower at 21.2x FY26E and 18.4x FY27E.

Investor takeaway

The July rebound reflects strong retail and institutional appetite, bolstered by new fund launches and persistent SIP inflows. Yet, high SIP discontinuations signal that investor discipline remains a challenge. Fund managers are clearly betting on domestic growth stories while staying cautious in global-linked sectors.