Despite a sharp slowdown in investor inflows into flexi-cap funds in May, fund managers continued to bet on banks and domestic cyclicals, increasing exposure to stocks such as Mahindra & Mahindra, HDFC Bank and ICICI Bank while trimming holdings in State Bank of India, ITC and Infosys.
According to AMFI data, net inflows into flexi-cap funds nearly halved to Rs 5,176 crore in May from Rs 10,148 crore in April. Even so, flexi-cap schemes retained their position as the largest category in the equity mutual fund universe, managing Rs 5.64 lakh crore in assets, ahead of mid-cap funds at Rs 4.88 lakh crore and large-cap funds at Rs 3.97 lakh crore. The category also had 2.40 crore folios in May, second only to small-cap funds.
Against this backdrop, an analysis of portfolio changes across 21 leading fund houses showed that fund managers used the month to raise exposure to banks, capital market plays and select cyclical sectors, even as they pared holdings in some consumer and energy stocks. The data, which tracks changes between April and May 2026, highlighted continued confidence in financials and domestic growth-oriented themes despite the moderation in fresh inflows.
M&M, HDFC Bank among top buys
Mahindra & Mahindra and HDFC Bank emerged as the most widely accumulated stocks during the month, with nine out of 21 asset management companies (AMCs) increasing their exposure to each of the companies.
ICICI Bank was the next most popular pick, with eight fund houses raising their stakes. BSE Ltd and Infosys also attracted fresh allocations from four AMCs each.
According to FinAlpha’s analysis, the top five stocks witnessing increased exposure in May were:
Mahindra & Mahindra Ltd (9 AMCs)
HDFC Bank Ltd (9 AMCs)
ICICI Bank Ltd (8 AMCs)
BSE Ltd (4 AMCs)
Infosys Ltd (4 AMCs)
The buying activity underscores the preference of fund managers for financials and domestic cyclicals, which are expected to benefit from strong economic growth and improving earnings visibility.
Banks dominate sector allocations
At the sector level, banks attracted the highest number of buy actions, registering 36 fund actions across the 21 fund houses.
Pharmaceuticals and biotechnology followed with 34 actions, while capital markets, finance and automobile stocks also saw significant buying interest.
Capital market-linked companies emerged as another area of focus, with BSE and ICICI Prudential Asset Management among the stocks seeing increased allocations.
Construction, telecom services, consumer durables and healthcare services also featured prominently among the sectors receiving fresh investments.
Lenskart among top fresh additions
Among fresh portfolio additions, unlisted eyewear retailer Lenskart Solutions was the most popular choice, with three fund houses introducing the stock into their portfolios.
Bharti Airtel and Marico were added by two AMCs each, while Adani Enterprises, Bharat Heavy Electricals, JSW Energy, Asian Paints, Cipla and SRF also found favour with fund managers.
SBI tops the sell list
On the other hand, State Bank of India emerged as the stock witnessing the biggest reduction in exposure, with six AMCs lowering their holdings.
ITC, Infosys, Bharat Electronics and PB Fintech were among the other stocks that saw selling by three fund houses each.
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The top five stocks witnessing reduced exposure were:
State Bank of India (6 AMCs)
ITC Ltd (3 AMCs)
Infosys Ltd (3 AMCs)
Bharat Electronics Ltd (3 AMCs)
PB Fintech Ltd (3 AMCs)
State Bank of India also figured among the complete exits, with two fund houses exiting the stock altogether.
ABB India recorded the highest number of complete exits, with three AMCs selling out of the stock. Hero MotoCorp was another major exit, with two fund houses fully exiting their positions.
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FMCG and energy face selling pressure
Sector-wise, fast-moving consumer goods and oil, gas and consumable fuels witnessed the heaviest selling pressure.
Aerospace and defence, cement, industrial manufacturing and transport services were among the other sectors where fund managers reduced exposure.
The portfolio changes indicate that India’s top flexicap funds continue to favour financials and growth-oriented sectors while booking profits in select defensive and consumption-related stocks as they reposition portfolios for the next phase of market growth.
Disclaimer: Business Today provides market and personal news for informational purposes only and should not be construed as investment advice. All mutual fund investments are subject to market risks. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.