January Portfolio Shuffle: Mutual Funds Rotate from IT and FMCG to Financials

In January, mutual funds adjusted sector allocations by adding financial stocks and cutting positions in information technology and fast-moving consumer goods, reflecting a shift in portfolio strategy. 

Increased Exposure to Financial Stocks 

Data released on February 13, 2026, shows that top mutual funds bought shares of major lenders such as Axis Bank, ICICI Bank, Union Bank and IndusInd Bank. Equitas Small finance bank also saw purchases as fund managers considered private bank valuations relatively cheap.  

Insurance stocks added to the mix include HDFC Life, GIC and Star Health, indicating a broader focus on the financial sector. 

Reduction in IT and FMCG Holdings 

At the same time, funds trimmed exposure to selected information technology companies and fast-moving consumer goods firms. The sell‑off was aimed at rebalancing risk and aligning with perceived valuation gaps across sectors. 

Read More: Mutual Funds SIP Stoppage Ratio Falls to 74.83% in January as Registrations Outpace Closures! 

Sectoral Impact on Portfolio Weightings 

The reallocation resulted in a higher weight for financials in the overall mutual fund portfolio, while the proportion of IT and FMCG stocks fell. This shift came after foreign investors sold heavily in financials during the month, creating opportunities for domestic fund managers. 

Key Companies Affected 

Banking names that received net inflows include Axis Bank, ICICI Bank, Union Bank, and IndusInd Bank. In the insurance space, HDFC Life, GIC, and Star Health were the primary beneficiaries. Conversely, several large IT and FMCG firms experienced net outflows as funds reduced their positions. 

Conclusion 

January saw mutual funds increase their stakes in banks and insurers while scaling back holdings in IT and FMCG stocks. The adjustments reflect a strategic response to valuation differentials and recent foreign investor activity in the financial sector. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities or companies mentioned are only examples and not recommendations. This does not constitute a personal recommendation or investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.