Mutual Funds Adjust Portfolios with Increased Focus on IT, Auto and Pharma in July 2026

In July 2026, mutual funds made significant changes to their investment portfolios, showing increased interest in IT, automotive, and pharmaceutical sectors. Meanwhile, exposure to public sector banks witnessed a downturn, as per The Economic Times news report. 

Mutual Funds Investment Shifts in July 2026 

As per the report, during this period, fund managers strategically adjusted portfolios, increasing their holdings in blue-chip companies within IT, auto, and pharmaceutical sectors. These sectors were chosen for their clearer earnings visibility compared to others. 

Public sector banks, including State Bank of India, Bank of Baroda, Canara Bank, Indian Bank, and Punjab National Bank, experienced a reduction in mutual fund investments. This divestment aligns with the preference for sectors offering promising earnings prospects. 

Public Sector Banks See Reduced Exposure 

Stake reduction in public sector banks was part of a broader trend. Fund houses preferred sectors with dependable earnings, shifting attention to specific stocks offering stability and stock-specific benefits. Non-banking financial companies and private sector lenders saw increased inflows. 

Mutual funds also continued investing in financial services, particularly in non-banking financial companies and private sector banks, favouring sectors with higher earnings potential. 

Read More: AMFI July 2026 Data: Equity Fund Inflows Fall 14.8%; Small Cap Fund Flows Jump 38.7%! 

Financial Services and Private Lenders See Added Interest 

Financial services, particularly non-banking financial institutions and select private lenders, gained traction among mutual funds. This trend complements the move away from public sector banks towards sectors with a stronger financial outlook. 

Mutual funds have adapted portfolio strategies to better align with industries demonstrating harder financial metrics, focusing heavily on secure and steady earnings visibility and growth prospects. 

Conclusion 

In July 2026, mutual funds reallocated investments, boosting their stakes in IT, auto, and pharma sectors. They lessened exposure to PSU banks while prioritising sectors anticipated to deliver robust earnings visibility, such as NBFCs and private lenders. 

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.