Mutual funds buy Dixon, Biocon, Kaynes; trim TCS, DLF, Coal India in June churn

Indian mutual funds continued their buying spree in June 2025, investing a net of Rs 154 billion into equity markets. This activity was accompanied by foreign institutional investors (FIIs) who contributed Rs 167 billion, indicating robust capital inflows into Indian equities, the Nuvama Alternative & Quantitative Research report highlighted. Mutual fund holdings in cash dropped to Rs 1,807 billion, or 5.34% of assets under management, a decrease from Rs 1,961 billion, or 6.05%, in May, suggesting a heightened confidence in the equity markets despite global economic uncertainties.

Large vs mid vs small cap stocks

In the large-cap segment, mutual funds displayed selective buying patterns. Asian Paints, Trent, Bajaj Finserv, Infosys, and Bharti Airtel emerged as top picks, reflecting a preference for quality consumption and financial names. Conversely, fund managers trimmed holdings in Tata Consultancy Services (TCS), DLF, Jindal Steel & Power, Kotak Mahindra Bank, and Coal India, indicating strategic reallocation within portfolios.

The mid-cap sector witnessed dynamic activity, with mutual funds showing a strong preference for manufacturing and healthcare stocks. The most bought mid-cap stocks included Dixon Technologies, Biocon, Aditya Birla Capital, Container Corporation, and Star Health Insurance. On the other hand, funds reduced stakes in Indian Hotels Company, Mazagon Dock Shipbuilders, Solar Industries, Coforge, and Max Healthcare Institute. New India Assurance made a fresh entry into mutual fund portfolios.

In the small-cap space, fund managers exhibited aggressive buying behavior, acquiring shares in Kaynes Technology India, Zydus Wellness, Capri Global Capital, Aptus Value Housing, and Jubilant Ingrevia. New additions included Capri Global and Suven Life Sciences. Meanwhile, notable stocks like BSE, CDSL, Hitachi Energy India, Computer Age Management Services (CAMS), and Motilal Oswal Financial Services experienced significant sell-offs, with PSP Projects and Uniparts India being completely exited during June.

Large stocks preferred

Over the past three months, mutual funds have consistently invested in large-cap stocks such as Reliance Industries, HDFC Bank, TCS, Titan Company, and ONGC. However, positions in Bharat Electronics (BEL), BPCL, TVS Motor Company, Godrej Consumer Products, and Max Healthcare Institute were reduced. This trend indicates a strategic shift towards retaining high-performing stocks while offloading less promising investments.

Mid-cap stocks have also seen significant trading activity in the past quarter, with key additions like Kaynes Technology India, Dalmia Bharat, KPIT Technologies, Multi Commodity Exchange of India (MCX), and NBCC India. Reductions were noted in holdings of Gujarat Fluorochemicals, CRISIL, Narayana Hrudayalaya, ACC, and Cholamandalam Finance, reflecting a reassessment of growth prospects in these firms.

Among small-cap stocks, mutual funds favoured Alkyl Amines Chemicals, Alok Industries, KPI Green Energy, Kirloskar Ferrous, and Gabriel India. In contrast, fund managers decreased their stakes in Vijaya Diagnostic, India Shelter Finance, Happy Forgings, Sansera Engineering, and Galaxy Surfactants. This selective approach underscores an emphasis on capturing potential growth opportunities in the small-cap segment while minimizing exposure to underperforming assets.

Overall, the mutual fund sector's strategic moves in June 2025 underscore a calculated approach to navigating market complexities. By diversifying across large, mid, and small-cap stocks, fund managers aim to optimise returns while adjusting to evolving market dynamics. These actions reflect the industry's adaptability in a volatile economic landscape, with a clear focus on long-term growth and stability.