Are small-cap funds turning bullish on finance and healthcare stocks?

Small-cap fund managers appear to be sharpening their focus on finance and healthcare-linked opportunities, while selectively reducing exposure to sectors that may have run ahead of fundamentals. Portfolio changes in April 2026 suggest that fund houses are increasingly favouring domestic growth themes and businesses with improving earnings visibility.

An analysis of portfolio activity across 19 leading fund houses indicates that small-cap managers actively reshuffled holdings during the month, reflecting a more targeted investment approach rather than broad-based buying.

Data compiled by FinAlpha showed 770 total portfolio actions, including 122 reduced positions and 51 complete exits, highlighting significant portfolio churn across the small-cap universe.

Finance and healthcare themes

Sector trends suggest fund managers are becoming increasingly constructive on financial and healthcare-related businesses.

According to the analysis, Finance and Auto Components emerged among the strongest accumulation themes in April. At the same time, Healthcare Services and Banks also witnessed healthy inflows.

The shift could indicate growing confidence in sectors linked to domestic consumption, lending activity and long-term structural growth.

Healthcare, in particular, has been drawing investor interest because of rising healthcare spending, expanding diagnostics businesses and increasing demand for quality medical services.

Meanwhile, financial companies continue to attract attention amid expectations of improving credit growth and stronger earnings visibility.

Financial names

The stock-level changes also support the broader sector trend.

Among the top stocks where fund managers raised exposure, PNB Housing Finance Ltd emerged as the strongest conviction bet, with allocations increased by seven AMCs.

The top five increased exposure names included:

• PNB Housing Finance Ltd (7 AMCs)
• Vijaya Diagnostic Centre Ltd (5 AMCs)
• Welspun Corp Ltd (4 AMCs)
• City Union Bank Ltd (4 AMCs)
• Timken India Ltd (4 AMCs)

Notably, the list includes both finance and healthcare-linked companies.

PNB Housing Finance and City Union Bank reinforce the preference toward financial businesses, while Vijaya Diagnostic highlights growing interest in healthcare services.

The buying trend suggests fund managers are looking for companies with scalable growth potential and stronger earnings visibility.

Fresh bets

Portfolio additions also reveal where fund managers see emerging opportunities.

The top fresh buys during the month included:

• RBL Bank Ltd
• Piramal Finance Ltd
• Angel One Ltd

The inclusion of RBL Bank and Piramal Finance strengthens the broader finance-sector trend visible across portfolios.

These additions suggest that fund managers are not restricting exposure to established names alone but are also identifying new opportunities within the financial ecosystem.

Electrical equipment

While fund managers added exposure in select sectors, some segments witnessed meaningful reductions.

Electrical Equipment emerged as the biggest sell signal, accounting for 19 fund actions, the highest among sectors seeing selling pressure.

The top five reduced exposure stocks included:

• Karur Vysya Bank Ltd
• KEI Industries Ltd
• MTAR Technologies Ltd
• Lumax Auto Technologies Ltd
• CCL Products (India) Ltd

The selling pattern may indicate tactical profit booking or portfolio rebalancing after strong rallies in certain industrial and manufacturing stocks.

Portfolio churn

The April reshuffle suggests small-cap fund managers are becoming more selective rather than aggressively buying across sectors.

The increased preference for finance and healthcare businesses points toward a search for stronger earnings visibility and domestic growth opportunities.

If these trends continue over the coming months, financial and healthcare names could increasingly become key themes within small-cap portfolios.