MFs in July: SBI tops mutual fund buys with record Rs 10,200 crore investment

Mutual funds (MFs) deployed massive inflows in July into marquee opportunities, with State Bank of India’s (SBI) record Rs 25,000-crore qualified institutional placement (QIP) and beaten-down IT stocks emerging as top bets. According to Nuvama Alternative & Quantitative Research (NAQR), mutual funds collectively invested Rs 10,200 crore in SBI shares last month, making it their single largest purchase. SBI Mutual Fund and HDFC Mutual Fund led the charge with allocations of Rs 2,322 crore and Rs 1,500 crore, while Quant Mutual Fund and Nippon India Mutual Fund picked up nearly Rs 1,200 crore each.

The offering — India’s biggest-ever QIP — received bids worth almost four times the shares on offer, attracting participation from Life Insurance Corporation of India (LIC) and several foreign portfolio investors (FPIs) alongside domestic MFs.

IT stocks back in favour

Even as the Nifty IT index slumped 9% in July — the worst performance among sectoral indices — mutual funds doubled down on technology stocks. Infosys and TCS together saw fresh MF inflows of about ₹9,400 crore, while HCL Technologies also ranked among the top 10 most-bought counters.

The contrarian bets come despite headwinds: the Nifty IT index is down nearly 20% in 2025, dragged by muted earnings, US tariff concerns, layoffs, and weak demand sentiment.

Financials dominate allocations

Outside IT, banking names continued to see strong traction. Apart from SBI, newly-listed HDB Financial Services, Axis Bank, Kotak Mahindra Bank, and ICICI Bank collectively attracted over Rs 2,000 crore of MF inflows in July.

Cash levels edge higher

Despite aggressive equity deployment, cash holdings in equity MFs ticked up slightly. NAQR noted that this reflected record inflows rather than restrained deployment. Cash and equivalents rose from Rs 1.82 Lakh crore in June to Rs 1.85 lakh crore in July, increasing their share of assets from 5.34% to 5.46%.

Equity schemes registered net inflows of Rs 42,702 crore in July — the highest ever, surpassing the previous peak of Rs 41,156 crore in December 2024.

Selective selling

Fund managers also trimmed positions in certain names. Interglobe Aviation and Eternal witnessed the largest net MF selling at Rs 2,400 crore and Rs 1,700 crore, respectively. Other top exits included HPCL, Hindalco Industries, HDFC AMC, ACC, and HDFC Bank.

Industry growth remains robust

The broader mutual fund industry continues to expand at a rapid pace. Data from the Association of Mutual Funds in India (AMFI) shows total assets under management (AUM) surged from Rs 67.25 lakh crore in January to Rs 74.41 lakh crore by June 2025 — an 11% rise in just six months.

The growth was supported by Rs 4.18 lakh crore in net inflows during the first half of 2025, including Rs 1.6 lakh crore into equity schemes. However, the pace of equity inflows has slowed since February, cooling from Rs 35,000–Rs 40,000 crore a month to about Rs 24,000 crore.

Nevertheless, equity AUM climbed steadily from Rs 29.5 lakh crore in January to Rs 33.47 lakh crore in June, showing resilience from both market gains and consistent, if slower, investor contributions.