Mutual Funds Trim Exposure in Metals, IT, PSU Banks, Cables and Oil & Gas Sectors in January

Mutual fund activity in January indicated a cautious stance across several major sectors, with fund managers trimming positions in select stocks while selectively adding exposure elsewhere. 

The selling trend appeared concentrated in cyclical and rate sensitive segments, suggesting portfolio rebalancing rather than broad based risk aversion. 

Despite overall outflows in certain industries, targeted buying in specific companies highlights a selective investment approach shaped by valuation considerations and evolving market expectations.

Metals and Mining

The metals and mining segment experienced the highest level of selling during the month, with mutual funds offloading shares worth approximately ₹54,102 million. Profit booking was visible across several non-ferrous and mining companies.

Key reductions were seen in Hindalco, Vedanta, National Aluminium, Hindustan Zinc and APL Apollo. 

At the same time, fund managers selectively accumulated positions in Tata Steel, Bharat Coking Coal and JSW Steel, indicating preference for companies perceived to have relatively stable demand visibility.

IT Services

Information technology services also witnessed notable outflows, with total selling amounting to around ₹23,624 million. The reduction in exposure was largely concentrated in mid tier and select large IT companies.

Mutual funds pared holdings in Tech Mahindra, HCL, Coforge, Persistent Systems and Mphasis. However, buying interest emerged in Wipro, Hexaware Technologies and Mastek, suggesting selective positioning within the sector rather than a complete withdrawal from technology stocks.

Cables and Wires

The cable stocks recorded selling worth roughly ₹17,650 million during January. Funds reduced exposure in several leading manufacturers, possibly reflecting valuation concerns following prior price appreciation.

Stocks witnessing selling pressure included Polycab, KEI, Sterlite, Universal Cables and Quadrant Future Tek. Meanwhile, Finolex Cables and RR Kabel attracted fresh allocations, indicating continued interest in companies aligned with infrastructure and electrification demand themes.

PSU Banks

Public sector banksstocks also saw net selling of about ₹11,552 million during the period. Fund managers trimmed holdings across multiple large state owned lenders.

Notable selling occurred in SBI, Canara Bank, PNB, Punjab & Sind Bank and UCO Bank. In contrast, Union Bank of India, Bank of Maharashtra and Bank of Baroda witnessed incremental buying, pointing towards selective rotation within the PSU banking space rather than a uniform sectoral exit.

Oil and Gas

The oil and gas sector registered selling of nearly ₹9,004 million in January. Mutual funds reduced exposure in several upstream and downstream energy companies amid fluctuating crude price expectations.

Selling was observed in ONGC, BPCL, IOC, HPCL and Mangalore Refinery and Petrochemicals. On the buying side, Reliance Industries, Oil India and Petronet LNG saw increased allocations, reflecting targeted positioning within the broader energy ecosystem.

Read More: SBI Mutual Fund Launches Midcap Momentum ETF for Trend-Focused Investors.

Conclusion

Mutual fund flows in January indicate a phase of sectoral recalibration rather than widespread risk reduction. While several industries experienced net selling, selective buying within each segment suggests that fund managers continue to focus on company specific fundamentals and portfolio balance. 

Market participants may interpret these shifts as part of ongoing allocation adjustments influenced by valuations, earnings outlook and macroeconomic developments.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/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.

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