Mutual Funds Increase Stakes in Banking and New-Age Tech, Reduce Exposure to IT, Metals in May 2026

In May 2026, mutual funds adjusted their investment strategies by increasing their stakes in banking, oil & gas, and new-age technology stocks, as per the news reports.  

This shift was marked by a decrease in holdings in the IT, metals, and power equipment sectors. 

Banking and Tech Stocks Gain Traction in Large Cap Stocks 

During May 2026, mutual funds showed a strong preference in Large Cap segment for banking stocks, alongside oil & gas companies and internet-focused businesses.  

This strategic move saw increased investments in major private banks like ICICI Bank and HDFC Bank, as well as companies such as Adani Enterprises, Reliance Industries, and Eternal. 

Reduction in IT and Metals Holdings in Large Cap Stocks 

Conversely, mutual funds reduced their exposure in the Large Cap segment to IT services companies, metals stocks, and power equipment makers.  

Notable reductions were seen in Infosys, Vedanta, Bank of Baroda, State Bank of India, and Polycab India, indicating a cautious stance towards sectors with valuation concerns and earnings uncertainties. 

Mid-Cap Stocks Activity in May 2026 

In the mid-cap segment, mutual funds increased their holdings in internet and energy-themed companies, such as Lenskart, Billionbrains (Groww), JSW Energy, PB Fintech, and Indus Towers.  

Meanwhile, they pared down investments in GE Vernova T&D, BSE, Hitachi Energy, Oracle Financial Services Software, and SAIL. 

Read More: What India’s Largest Large-Cap Funds, Including ICICI Prudential, Nippon India and HDFC, Bought and Sold in May! 

Small-Cap Stocks Activity in May 2026 

Among small-cap stocks, mutual funds showed a preference for gas utilities, buying shares in Gujarat Gas, Indraprastha Gas, Sona BLW Precision Forgings, Pine Labs, and Bandhan Bank.  

Selling activity was observed in MTAR Technologies, Cohance Lifesciences, GE Shipping, E2E Networks, and CEAT. 

Conclusion 

In May 2026, mutual funds increased investments in banking, oil & gas, and tech stocks, while reducing holdings in IT, metals, and power equipment. Large-cap investments included ICICI Bank and HDFC Bank, while mid-cap and small-cap preferences leaned towards internet and energy themes. 

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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.