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Key observations

* The Nifty managed to close above 24k after five months, ending 2.2% up MoM at 24,384 in Jul’26. The index has closed higher for the second successive month. Notably, the index was extremely volatile and swung by around 925 points before closing 518 points higher. In Jul’26, FIIs recorded inflows of USD2.5b after four consecutive months of outflows. However, DII inflows slowed down in Jul’26 to USD3.7b, the lowest level since May’25.

* The total AUM of the MF industry increased by 4.3% MoM to touch a new high of INR85.8t in Jul’26, primarily led by a MoM increase in the AUM of liquid (INR1,454b), equity (INR1,090b), income (INR511b), other ETFs (INR231b), and balanced (INR188b) funds.

* Equity AUM of domestic MFs (including ELSS and index funds) rose 2.7% MoM to INR41.8t in Jul’26, owing to a rise in market indices (Nifty up 2.2% MoM) and an increase in sales of equity schemes (up 2.3% MoM to INR798b). The pace of redemptions picked up to INR536b (up 9.1% MoM). Consequently, net inflows moderated in Jul’26 to INR262b from INR289b in Jun’26.

* Investors continued to park their money in mutual funds. Inflows and contributions in systematic investment plans (SIPs) stood at INR319.6b in Jul’26 (up 0.6% MoM and +12.3% YoY).

A few interesting facts

* The month witnessed noteworthy changes in the sector and stock allocation of funds. On a MoM basis, the weights of Technology, Automobiles, ECommerce, Healthcare, NBFC-Lending, and Telecom increased, while those of Private Banks, Capital Goods, Utilities, Oil & Gas, PSU Banks, Retail, Insurance, and Consumer Durables moderated.

* Technology’s weight, after slipping to an all-time low of 5.9% in Jun’26, climbed in Jul’26 to 6.6% (+70bp MoM; -140bp YoY).

* Automobile’s weight climbed for the third consecutive month in Jul’26 to 8.9% (+30bp MoM; +80bp YoY).

* Private Banks’ weight saw a moderation in weight for Jul’26 to 17.4% (-50bp MoM and YoY).

* Capital Goods’ weight, after climbing to a 24-month high of 8.1% in Jun’26, moderated to 7.6% in Jul’26 (-50bp MoM; +30bp YoY).

* E-Commerce weight climbed for the third consecutive month to an all-time high in Jul’26 to 3.1% (+30bp MoM; +80bp YoY).

* The top sectors where MF ownership vs. the BSE 200 was at least 1% higher were NBFC - Non-Lending (15 funds over-owned), Healthcare (15 funds over-owned), E-Commerce (10 funds over-owned), Capital Goods (9 funds over-owned), and Chemicals (9 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), Consumer (14 funds under-owned), PSU Banks (12 funds under-owned), and Utilities (11 funds under-owned).

* In terms of value change MoM, divergent interests were visible within sectors: The top 10 stocks that witnessed the maximum rise in value were Bharti Airtel, Infosys, Bajaj Finance, ICICI Bank, M&M, Eternal, TCS, Torrent Pharma, HCL Tech, and Adani Enterprises. Conversely, the stocks that witnessed the maximum MoM decline in value were HDFC Bank, Axis Bank, L&T, Varun Beverages, Trent, Bharat Electronics, Dr Reddy’s Labs, Avenue Supermarts, BOB, and NTPC

Value of equity MFs rises 2.6% MoM and 16.4% YoY

* The total equity value of the top 21 AMCs was up 2.6% MoM (+16.4% YoY) in Jul’26 vs. a 2.2% MoM rise (-1.6% YoY) for the Nifty-50.

* Among the Top 10 funds, the highest MoM increase was observed in DSP Mutual Fund (+4.2%), HDFC Mutual Fund (+3.5%), ICICI Prudential Mutual Fund (+3.1%), UTI Mutual Fund (+2.9%), and Axis Mutual Fund (+2.8%).

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