September market crash: These flexi-cap funds limited losses better than peers; do you own any?

Indian equities ended September under pressure, with the Nifty 50 recording its steepest monthly decline since 2018 as elevated crude prices, rising global bond yields and foreign selling weighed on sentiment. The sell-off also put pressure on flexi-cap mutual funds, although the extent of decline varied across schemes.

The Nifty 50 closed September at 22,620.45, down 6.1% during the month. The benchmark gained 1.3% during the first half of FY27.

Against this backdrop, all the flexi-cap funds in the September 2026 snapshot recorded negative monthly returns. Some schemes, however, cushioned the fall better than the broader market.

These flexi-cap funds fell the least

Taurus Flexi Cap Fund recorded the smallest decline among the funds tracked, falling 0.67% in September. Parag Parikh Flexi Cap Fund followed with a 2.14% decline, while 360 ONE Flexicap Fund fell 2.25%.

Unifi Flexi Cap Fund and Quant Flexi Cap Fund recorded monthly declines of 2.28% and 2.33%, respectively.

The Nifty 500 TRI declined 5.85% during September. The five schemes therefore registered smaller monthly declines than the benchmark, although monthly performance alone does not indicate longer-term outcomes.

MUST READ: Your mutual fund says “High Risk”. But do you know what that risk actually means?

The difference also highlights how portfolio positioning can influence returns during a market correction. Flexi-cap funds can allocate across large-, mid- and small-cap stocks, but their exposure and stock selection can vary.

A fund that falls less may have benefited from lower exposure to segments or sectors facing greater selling pressure. Such positioning can produce different outcomes when market leadership changes.

September 2026 performance of flexi-cap funds

Source: FinAlpha. Data for August 31–September 30, 2026

Foreign selling adds pressure

Foreign portfolio investors (FPIs) withdrew ₹25,662 crore from Indian equities through the secondary market in September, ending a two-month buying streak. However, they invested ₹8,551 crore through the primary market, showing continued participation in new issuances.

ALSO READ: India’s mid- and small-cap stocks among world’s most expensive, says Ruchir Sharma

Domestic institutional investors (DIIs), meanwhile, provided a significant counterweight, investing ₹52,617 crore during September.

The market capitalisation of NSE-listed companies stood at around ₹467 lakh crore at the end of September, compared with ₹469 lakh crore in June. It was nearly 14% above the ₹410 lakh crore recorded in March 2026.

IT stocks among major laggards

The market decline was broad-based, with all sectoral indices ending September in the red. The Nifty IT index fell nearly 12%, while Bajaj Finserv and Infosys declined 14.3% and 12.3%, respectively.

Rising US Treasury yields and crude oil prices added to concerns over valuations and foreign flows. The US 10-year Treasury yield remained around 5.25%, adding to global valuation pressures.

For flexi-cap investors, the September data highlights the variation in performance even within the same fund category. Portfolio allocation, sector exposure and stock selection can produce different outcomes during a correction.

Investors will now track second-quarter earnings, crude prices, FPI flows and RBI monetary policy, along with geopolitical developments, tariffs and festive-season demand. The September return should therefore be viewed alongside longer-term performance, portfolio composition and risk levels, rather than in isolation.

DO READ: Tata Asset Management launches long-short SIF: What is new for investors