Equity MFs deploy Rs 13,706-crore cash in January

With the equity indices logging a second consecutive month of fall and fewer new fund offer being launched in January, equity mutual fund schemes deployed Rs 13,705.87 crore of their cash holdings, taking the total to Rs 1.35 lakh crore, according to Prime Database monthly mutual fund tracker. However, overall cash holdings of fund houses shot up by 46% from December and touched Rs 4.73 lakh crore. SBI Mutual Fund increased its overall cash holdings the most by Rs 29,281.77 crore, but its equity cash holding fell by Rs 1,858.97 crore. During the month, debt schemes saw Rs 74,827-crore inflows after last month’s outflow of Rs 1.32 lakh crore. The fund house’s fact sheet for the month said both Indian equity and fixed-income markets significantly underperformed emerging-market peers in 2025 and the trade deal could offer a meaningful sentiment boost to equities; however, a sustainable, broad-based market recovery will also require earnings rebound. It added: “Any rupee recovery stemming from improved external conditions is likely to spill over into fixed income, partly offsetting the negative impact of the Budget-related G-Sec supply shock. Over the medium term, though, interest-rate trajectories will continue to be shaped by demand–supply balance, commodity price trends, and their pass-through to inflation.” Buying the Dip In equity schemes, among fund houses that deployed major volumes were Motilal Oswal Mutual Fund, ICICI Prudential Mutual Fund, and PPFAS Mutual Fund having invested Rs 6,690.33 crore, Rs 3,500 crore, and Rs 3,147.14 crore, respectively. Industry-wide, the most-bought stocks were HDFC Bank, ICICI Bank, Biocon, and Kotak Mahindra Bank while they sold Hindalco, MCX, Vedanta, and SBI. Data show that as of January end, 32% of mutual fund holdings were in financial services sector, followed by 17.35% in consumer discretionary, and 9.32% in industrials. Valuations and Volatility According to ICICI Prudential AMC’s fact sheet, the Indian markets have underperformed global peers significantly in recent times, cooling-off valuations and the rupee has also depreciated. However, despite recent corrections from its peak, the overall market valuations continue to remain in the neutral zone. It added that while the narrative around India’s long-term structural growth continues to remain positive, there may be minor hiccups in the interim due to geopolitical and trade tensions, choppy FIl flows, soaring global valuations and volatile macros.