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Indian Mutual Funds Bought Financials Heavily During March Sell-Off

New fund-flow data point to counter-cyclical bets clustered in banks during a sharp jump in bond yields.

Overview

  • Domestic mutual funds bought about Rs 1.13 lakh crore of shares in March 2026, steering roughly 49% of that into financials worth about Rs 55,413 crore.
  • Purchases were concentrated, with the ten most-bought stocks drawing Rs 65,394.83 crore led by HDFC Bank, Bharti Airtel and ICICI Bank.
  • Industry assets under management fell to Rs 46.6 lakh crore in March from Rs 51.29 lakh crore in February as prices dropped.
  • Equity schemes still logged about Rs 40,500 crore of net inflows and a record Rs 32,090 crore from monthly SIPs, showing steady retail investing through the decline.
  • Banking shares had their worst month since March 2020 as Nifty Bank fell 17% and Nifty Financial Services dropped 15.6% after the 10-year yield rose more than 37 basis points above 7%, raising mark-to-market risks on banks’ government bond holdings and reflecting geopolitical strain, higher oil and RBI support for the rupee.