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Key observations

* The Nifty slid 6.1% MoM in Sep’26, marking its second consecutive monthly decline amid geopolitical headwinds. The index fluctuated within a 1,574- point range before closing 1,460 points (or 6.1% MoM) lower at 22,620, marking its second-steepest monthly decline since Oct’24. In Sep’26, FIIs recorded outflows of USD4.1b after two consecutive months of inflows. DII inflows remained strong in Sep’26 at USD8b.

* After scaling a new high of INR87.1t in Aug’26, the MF industry’s total AUM moderated to INR82.6t (-5.1% MoM) in Sep’26, primarily due to MoM declines in the AUM of equity (INR1,785b), liquid (INR1,414b), income (INR438b), other ETFs (INR420b), and balanced (INR291b) funds.

* Equity AUM of domestic MFs (including ELSS and index funds) decreased 4.3% MoM to INR40t in Sep’26, reaching a four-month low owing to a decline in market indices (Nifty down 6.1% MoM). Notably, sales of equity schemes rose 2.1% MoM to INR822b, while redemptions slowed to INR412b (down 15.5% MoM). Consequently, net inflows increased to INR409b in Sep’26 from INR317b in Aug’26.

* Investors continued to park their money in mutual funds. Notably, inflows and contributions to systematic investment plans (SIPs) reached a new high of INR324.9b in Sep’26 (up 0.6% MoM and 10.7% YoY).

A few interesting facts

* The month witnessed noteworthy changes in the sectoral and stock allocations of funds. On an MoM basis, the weights of Healthcare, Metals, Private Banks, Consumer, E-Commerce, Utilities, NBFC-Non Lending, Consumer Durables, and Logistics increased, while those of Technology, Automobiles, PSU Banks, NBFC-Lending, and Retail moderated.

* Healthcare’s weight climbed for the fifth consecutive month to ~10-year high in Sep’26 to 8.6% (+20bp MoM; +110bp YoY).

* Metals’ weight experienced a rise for the third consecutive month to a 62-month high in Sep’26 to 3.8% (+20bp MoM; +50bp YoY).

* Technology’s weight moderated to 6.0% in Sep’26 (-60bp MoM; -170bp YoY).

* Automobiles’ weight witnessed a moderation in Sep’26 to 8.6% (-30bp MoM and -20bp YoY).

* PSU Banks’ weight declined to a one-year low in Sep’26 to 3.2% (-20bp MoM and -10bp YoY).

? The top sectors where MF ownership vs. the BSE 200 was at least 1% higher were Healthcare (16 funds over-owned), NBFC–Non-Lending (16 funds over-owned), E-Commerce (10 funds over-owned), Capital Goods (9 funds over-owned), and Chemicals (8 funds over-owned).

* The top sectors where MF ownership vs. the BSE 200 was at least 1% lower were Oil & Gas (19 funds under-owned), Private Banks (15 funds underowned), Technology (12 funds under-owned), PSU Banks (12 funds under-owned), and Consumer (12 funds under-owned).

* In terms of value change MoM, divergent interests were visible within sectors: The top 10 stocks that recorded the maximum increases in value were BSE, HDFC Bank, Coal India, Meesho, Gland Pharma, Tata Steel, Lenskart Solutions, Dr Reddys Labs, Aditya Infotech, and ITC. Conversely, the stocks that witnessed the maximum MoM declines in value were ICICI Bank, SBI, Infosys, PB Fintech, L&T, Axis Bank, TCS, Reliance Industries, Maruti Suzuki, and M&M.

Down 5% MoM to INR82.6t in Sep’26

* After scaling a new high of INR87.1t in Aug’26, the MF industry’s total AUM moderated to INR82.6t (-5.1% MoM) in Sep’26, primarily due to MoM declines in the AUM of equity (INR1,785b), liquid (INR1,414b), income (INR438b), other ETFs (INR420b), and balanced (INR291b) funds.

* Equity AUM of domestic MFs (including ELSS and index funds) decreased 4.3% MoM to INR40t in Sep’26, reaching a four-month low owing to a decline in market indices (Nifty down 6.1% MoM). Notably, sales of equity schemes rose 2.1% MoM to INR822b, while redemptions slowed to INR412b (down 15.5% MoM). Consequently, net inflows increased to INR409b in Sep’26 from INR317b in Aug’26.

Value of equity MFs down 4.5% MoM but up 11% YoY

* The total equity value of the top 21 AMCs was down 4.5% MoM (+11% YoY) in Sep’26 vs. a 6.1% MoM decline (-8.1% YoY) for the Nifty-50.

* Among the Top 10 funds, the highest MoM decline was observed in Axis Mutual Fund (-6.5%), Mirae Asset Mutual Fund (-6.1%), UTI Mutual Fund (- 5.4%), HDFC Mutual Fund (-5.2%), and Aditya Birla Sun Life Mutual Fund (-4.8%).

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