Mutual Funds Cash Holdings Drop to 16-Month Low in March 2026

In March 2026, mutual funds in India witnessed a significant reduction in cash holdings, marking their lowest level in 16 months.  

The market correction served as a strategic opportunity for fund houses to acquire stocks, resulting in cash reserves of ₹1.86 lakh crore, a 12% decrease from ₹2.1 lakh crore in February. 

Strategic Moves in Mutual Funds Amid Market Correction 

During the market downturn in March, approximately 60% of mutual funds utilised their cash to purchase stocks, reflecting a proactive investment strategy amidst fluctuating market conditions. 

The overall cash as a percentage of assets under management fell to 4.73%, down from 4.86% in February. 

Impact of Geopolitical Tensions and Oil Prices on Indian Markets 

The decline in cash holdings occurred against a backdrop of increased geopolitical tensions and elevated crude oil prices, which exacerbated concerns over inflation and economic growth.  

Both Sensex and Nifty indices plummeted by 11.5%, with numerous stocks hitting their 52-week lows. 

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Changes in Major Fund Houses' Cash Positions 

SBI Mutual Fund experienced a reduction in equity cash holdings from ₹34,704 crore in February to ₹27,464 crore in March.  

Similarly, ICICI Prudential Mutual Fund's cash reserves fell to ₹17,290 crore. Motilal Oswal Mutual Fund and Quant Mutual Fund also reported declines in their cash positions to ₹3,124 crore and ₹10,000 crore, respectively. 

Notable Increases in Cash Holdings 

Conversely, some fund houses increased their cash holdings. Nippon India Mutual Fund grew its cash to ₹7,811 crore in March, from ₹6,158 crore in February.  

Axis Mutual Fund and Edelweiss Mutual Fund also reported increments in their cash reserves to ₹16,470 crore and ₹1,505 crore, respectively. 

Conclusion 

Mutual funds in India strategically navigated the market turbulence in March 2026, using the drop as an opportunity to boost their stock portfolios, significantly reducing their cash holdings in the process. The period saw varying decisions across fund houses with some increasing and others decreasing their cash reserves, reflecting diverse market responses. 

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.