The holding of mutual funds in the industrials and financial services sector increased the most in May over April while utilities was the only sector that saw a reduction, according to Prime Database’s monthly MF tracker.
Data showed that the value of holding in the industrials sector rose by Rs 56,202.97 crore followed by Rs 53,536 crore in financials and Rs 45,295.70 crore in consumer discretionary. Utilities was the only sector in which their holding value decreased by Rs 3,392.10 crore.As on May-end 2025, mutual funds held 11.29% of the market capitalisation of the industrial sector compared to 9.80% in April. In the financial services sector, the percentage rose from 13.58% to 14.13%.
HDFC Mutual Fund in its May Factsheet noted that after the recent rally, the valuations of many sectors are now at a premium to historical averages except those for automobiles and private banks which are at a small discount to historical average.
Among stocks, ITC was the most bought in May with funds having net bought shares worth Rs 8,009.50 crore, followed by HDFC Bank, Eternal, Airtel, and IndiGo. Meanwhile, they were net-sellers in Max Financial Services, FSN E-Commerce, Coromandel International, BSE, and Container Corporation of India.
An Axis Mutual Fund’s report said, “In the current scenario, we are overweight the financial sector, particularly NBFCs”. Although it has slightly reduced exposure in pharmaceuticals given uncertainty regarding tariffs and pricing issues in the US, it is overweight on the sector.”
“We believe that the discretionary segment is well positioned to benefit from strengthening domestic momentum and lower interest rates coupled with lower tax rates may likely provide consumption a fillip,” it said adding that renewable capex, manufacturers and power transmission/distribution firms, defence are the other themes we favour and we have increased our exposure to defense in the last few months.