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MF inflows surge 80% in July to ₹5.65 lakh cr; IT, PSU Banks lead buying

Equity mutual funds in India posted a sharp recovery in July 2025, with inflows (excluding arbitrage schemes) rising 80% month-on-month (MoM) to ₹56,500 crore ($6.5 billion). This follows a 30% MoM rise in June inflows, according to JM Financial's India MF Monthly Flow Tracker. Core Equity, Thematic Funds Lead the Surge Core equity funds attracted ₹42,700 crore in July, up 81% MoM. Thematic funds saw a dramatic jump to ₹9,400 crore from just ₹500 crore in June. Equity NFOs raised ₹10,880 crore — nearly 12x higher than June's ₹930 crore. Arbitrage funds saw inflows of ₹7,300 crore, down from ₹15,600 crore in June. All core equity categories saw MoM improvement in flows, except ELSS funds, which recorded outflows. Mutual funds bet big on IT iIndian mutual funds displayed a clear sectoral shift in July 2025, aggressively buying into software services, PSU banks, and private banking names, while paring holdings in aviation, cement, and certain commodity-linked sectors. Data from AMFI and JM Financial reveals that Software & Services topped the buying list with ₹1,60,986 million worth of purchases. Large-cap IT majors Infosys, TCS, HCL Tech, Tech Mahindra, and Info Edge were the most favoured, while smaller IT names like LTIMindtree, Birlasoft, and Intellect Design saw selling pressure. PSU Banks followed closely, with ₹1,13,499 million worth of net buying led by State Bank of India, Canara Bank, Indian Bank, Bank of Maharashtra, and Bank of Baroda, even as Union Bank of India, Bank of India, and Punjab National Bank saw trimming. In Private Banks, mutual funds bought ₹1,03,314 million worth of stocks, adding heavily to Axis Bank, Kotak Mahindra Bank, ICICI Bank, AU Small Finance Bank, and RBL Bank, while reducing exposure to HDFC Bank, IndusInd Bank, and DCB Bank. The NBFC space saw ₹78,184 million worth of buying, led by HDB Financial Services, Cholamandalam Investment, Bajaj Finance, L&T Finance, and 360 One Wam, with selling in Power Finance Corporation, BSE, and MCX. Other heavy buying sectors included: Capital Goods (₹45,163 mn): CG Power, Bharat Electronics, Hindustan Aeronautics, PG Electroplast, Havells. Auto & Auto Components (₹43,713 mn): M&M, Maruti Suzuki, Sona BLW, Hero MotoCorp, Bharat Forge. Pharmaceuticals & Healthcare (₹41,118 mn): Anthem Biosciences, Lupin, JB Chemicals, Laurus Labs, Sai Life Sciences. Realty (₹37,166 mn): Oberoi Realty, Lodha, The Phoenix Mills, Marathon Nextgen, Godrej Properties. Consumer (₹25,268 mn): ITC, Godrej Consumer, Britannia, Devyani International, Adani Wilmar. Consumer Durables (₹17,039 mn): Dixon Technologies, Voltas, Amber Enterprises, Blue Star, Crompton Greaves. Where Funds Sold Aggressively The largest sectoral sell-off was in Ports & Logistics (₹21,234 mn net selling), with big cuts in Interglobe Aviation, Container Corp, Cochin Shipyard, Mahindra Logistics, and Aegis Vopak. Other notable selling sectors: Cement (-₹20,072 mn): ACC, Grasim Industries, Ambuja Cements, JK Cement, JK Lakshmi Cement. Agrochemicals & Petrochemicals (-₹11,825 mn): Solar Industries, UPL, Aarti Industries, Chambal Fertilisers, Paradeep Phosphates. AMC NBFCs (-₹10,070 mn): HDFC AMC, Nippon AMC. Metals & Mining (-₹9,158 mn): Hindalco, Hindustan Copper, SAIL, Ratnamani Metals, NALCO. Utilities (-₹8,811 mn): NTPC, IEX, Siemens Energy, Tata Power, Torrent Power. Coal (-₹7,664 mn): Coal India. Media (-₹3,377 mn): Zee Entertainment, PVR Inox, TV Today, Saregama, Jagran Prakashan. Telecom Services (-₹2,828 mn): Bharti Airtel, Indus Towers, Tejas Networks. Ceramics, Plyboards & Glass (-₹1,868 mn): Kajaria Ceramics, Pokarna, Greenply Industries, Greenlam Industries, Somany Ceramics. Biggest Stock-Level Moves Top Additions: State Bank of India – ₹103,689 mn Infosys – ₹57,011 mn TCS – ₹43,003 mn HDB Financial Services – ₹41,654 mn Reliance Industries – ₹41,029 mn Axis Bank – ₹38,297 mn Kotak Mahindra Bank – ₹31,606 mn HCL Technologies – ₹28,149 mn M&M – ₹27,766 mn Anthem Biosciences – ₹26,245 mn Top Reductions: Interglobe Aviation – ₹23,358 mn Eternal – ₹15,945 mn HPCL – ₹9,809 mn Hindalco Industries – ₹9,597 mn NTPC – ₹9,285 mn ACC – ₹8,590 mn HDFC AMC – ₹8,115 mn Solar Industries – ₹7,961 mn Coal India – ₹7,664 mn Sun Pharma – ₹7,554 mn SIP Flows Maintain Momentum Despite Closures SIP inflows climbed to ₹28,500 crore ($3.3 billion) in July, from June's levels. 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, up 2.6 million MoM. New SIP registrations rose to 6.9 million from 6.2 million in June. SIP closures hit 4.3 million, putting discontinuations at 63% of new registrations. Total contributing SIP accounts rose to 91.1 million from 86.5 million in June. Sector Positioning — Where Funds Are Overweight & Underweight Overweight vs BSE 200: Pharmaceuticals & healthcare Capital goods E-commerce Consumer durables Agrochemicals & petrochemicals Funds also hold exposure to sectors outside the BSE 200 — such as building materials, media, sugar, and diversified plays. Underweight vs BSE 200: Private banks Oil & gas IT services Consumer Metals & mining Cash Levels Steady Indian mutual funds' cash holdings were ₹2,07,000 crore in July — 4.9% of total equity AUM. This was slightly higher than June's ₹2,04,000 crore (4.8% of AUM). Market Context — Nifty Valuation Snapshot JM Financial Estimates: Nifty PE: 22.0x (FY26E) → 19.1x (FY27E) ROE: 15.4% (FY26E) → 16.3% (FY27E) Bloomberg Estimates: Nifty PE: 21.2x (FY26E) → 18.4x (FY27E) ROE: 15.4% (FY26E) → 15.5% (FY27E) Investor takeaway: The July surge signals strong retail and institutional participation, driven by new product launches and sustained SIP contributions. However, the high SIP closure rate suggests the need for greater investor discipline. Sector tilts show fund managers backing domestic growth themes like pharma, capital goods, and e-commerce, while staying cautious on private banks and IT.