MF investment: Large & midcap funds dump banks, pile into metal stocks in June; Vedanta Aluminium, Sterlite among top bets

Large and midcap mutual funds sharply increased their exposure to metal stocks while reducing allocations to banking shares in June, signalling a notable sector rotation in favour of commodity-linked businesses. Data compiled by FinAlpha, based on the portfolios of the top eight large and midcap mutual funds, showed fund managers channelled fresh capital into non-ferrous and ferrous metal companies, even as banks emerged as the biggest sector witnessing outflows.

Overall, the funds were net buyers of ₹9,823 crore during the month, increasing exposure to 97 stocks and making 40 fresh purchases, reflecting continued buying activity despite selective profit booking in sectors that had outperformed earlier.

Metals emerge as the biggest sectoral winners

Sector-wise, Non-Ferrous Metals attracted the highest net inflows of ₹1,532 crore, making it the biggest beneficiary of mutual fund buying during June. Ferrous Metals followed with inflows of ₹803 crore, while Petroleum Products received ₹464 crore.

Fund managers also increased allocations to Automobiles (₹463 crore), Capital Markets (₹356 crore), Industrial Products (₹348 crore), Telecom Equipment (₹305 crore) and Cement & Cement Products (₹302 crore), indicating broader interest in manufacturing- and infrastructure-linked sectors.

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In contrast, Banks saw the largest net outflows at ₹2,180 crore, making financials the biggest casualty of June's portfolio reshuffle. Retailing followed with outflows of ₹548 crore, while Textiles & Apparel recorded net selling worth ₹392 crore.

Vedanta Aluminium, Sterlite among top picks

At the stock level, Vedanta Aluminium Metal Ltd emerged as the biggest beneficiary of increased exposure, with fund managers investing ₹717 crore during the month. Sterlite Technologies followed with additional investments worth ₹329 crore, while Maruti Suzuki India attracted ₹307 crore.

Other major additions included Reliance Industries (₹262 crore) and Bharat Electronics (₹248 crore), reflecting buying interest across energy, defence and manufacturing themes.

Top stock bets by large & midcap funds

Stock	Investment (₹ crore)
Vedanta Aluminium Metal	717
Sterlite Technologies	329
Maruti Suzuki India	307
Reliance Industries	262
Bharat Electronics	248

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Fund managers also increased holdings in Jubilant FoodWorks, Multi Commodity Exchange of India (MCX), Hyundai Motor India, HDFC Bank, Britannia Industries, SBI Life Insurance, State Bank of India, NTPC, Divi's Laboratories and SRF.

Fresh buying focused on metal names

The largest fresh addition to portfolios was Hindalco Industries, with purchases worth ₹664 crore. It was followed by Jindal Steel at ₹550 crore and Multi Commodity Exchange of India at ₹452 crore.

Fresh positions were also initiated in UltraTech Cement, Muthoot Finance, APL Apollo Tubes, Tata Steel, National Aluminium Company (NALCO), Vedanta, JSW Steel, Lenskart Solutions, Bharat Petroleum Corporation, BSE, Mahindra & Mahindra and Dr. Reddy's Laboratories, reinforcing the shift towards industrial, metal and infrastructure-related businesses.

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Banks bear the brunt of selling

Among individual stocks, HDFC Bank witnessed the largest reduction in exposure, with mutual funds trimming holdings worth ₹1,200 crore. Axis Bank followed with sales worth ₹516 crore, while Page Industries (₹415 crore), FSN E-Commerce Ventures (Nykaa) (₹380 crore) and HDFC Asset Management Company (₹307 crore) also featured among the biggest reductions.

Fund managers also made complete exits from Avenue Supermarts (₹196 crore), Kalpataru Projects International (₹178 crore) and Voltas (₹176 crore).

Biggest fresh buys vs biggest reductions

Top Fresh Buys	₹ crore	Biggest Reductions	₹ crore
Hindalco Industries	664	HDFC Bank	1,200
Jindal Steel	550	Axis Bank	516
MCX	452	Page Industries	415
UltraTech Cement	NA	Nykaa	380
Muthoot Finance	NA	HDFC AMC	307

The June portfolio activity highlights a clear preference among large and midcap fund managers for commodity-linked sectors, particularly non-ferrous and ferrous metals, while reducing exposure to financials and select consumption-oriented businesses. With fresh allocations spread across 97 stocks and 40 new additions, the data points to active sector rotation rather than a slowdown in overall equity deployment.

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