From the stock market point of view, there may have been a decline in the stock market in the month of January, but mutual funds did not hesitate in investing. According to Prime Database’s monthly mutual fund tracker, equity mutual fund schemes infused Rs 13,705.87 crore of their cash holdings, taking total holdings to Rs 1.35 lakh crore. However, the total cash holdings of fund houses increased by 46 percent from December to Rs 4.73 lakh crore. SBI Mutual Fund recorded the highest increase of Rs 29,281.77 crore in its total cash holdings, but its equity cash holdings declined by Rs 1,858.97 crore. This month, there was an inflow of Rs 74,827 crore in debt schemes, compared to an outflow of Rs 1.32 lakh crore last month.
Fact sheet of fund houses came out
The fund house’s fact sheet this month said both Indian equity and fixed-income markets significantly underperformed emerging market peers in 2025 and the trade deal could provide a significant positive support to equities. However, a sustained and broader market correction would also require a rebound in income. It further said that any recovery in the rupee due to improving external conditions is likely to have an impact on fixed income bonds, which may offset to some extent the negative impact of the budget-related G-sec supply crisis. However, in the midterm, the trend in interest rates will continue to be determined by the demand-supply balance, commodity price trends and their impact on inflation.
buying on dips
Among equity schemes, the fund houses that made the most investments were Motilal Oswal Mutual Fund, ICICI Prudential Mutual Fund and PPFAS Mutual Fund, which invested Rs 6,690.33 crore, Rs 3,500 crore and Rs 3,147.14 crore, respectively. At the industry level, the most bought shares were HDFC Bank, ICICI Bank, Biocon and Kotak Mahindra Bank, while they sold shares of Hindalco, MCX, Vedanta and SBI. The data shows that as of January end, 32 per cent of mutual fund holdings were in the financial services sector, followed by 17.35 per cent in the consumer sector and 9.32 per cent in the industrial sector.
Valuation and Volatility
According to the fact sheet of ICICI Prudential AMC, in recent times the performance of Indian markets has been much lower than the global markets, due to which valuations have softened and the value of the rupee has also declined. However, despite some decline from recent highs, overall market valuations remain in the neutral zone. It also said that India’s long-term structural growth outlook remains positive, but there may be some minor headwinds in the interim period due to geopolitical and trade tensions, volatile foreign currency flows, rising global valuations and volatile macro economic factors.