Mutual funds appear to have turned cautious on several smallcap stocks after two straight quarters of aggressive accumulation, according to the latest shareholding trend analysis for the March 2026 quarter, as per the ACE Equity report.
An analysis of mutual fund holdings in BSE smallcap companies showed that institutional investors trimmed their exposure in 73 stocks during the March quarter, reversing the buying trend seen between June 2025 and December 2025.
The development comes amid increased volatility in the broader smallcap segment, where stock performances have remained sharply divergent over the past year.
From June 2025 to December 2025, mutual funds had steadily increased their holdings in several smallcap companies, reflecting optimism around long-term growth prospects and improving business fundamentals.
However, the March 2026 quarter witnessed a noticeable pullback, indicating a more cautious institutional stance towards select counters.
Market participants often closely monitor mutual fund allocation patterns as these institutions are generally regarded as informed investors with research-driven investment strategies.
Mutual fund holding in Newgen Software Technologies declined to 3.33% in March 2026 from 4.12% in December 2025.
The stock has witnessed significant weakness over the past year, declining nearly 65% during the period.
Read More: Mutual Funds Trim Stakes in 10 Major Stocks Across Over 15 Schemes Amid April 2026 Market Volatility!
Mutual fund ownership in Ecos (India) Mobility & Hospitality fell to 10.17% from 12.51% in the previous quarter.
The stock has declined around 50% over the last one year, reflecting continued pressure in the counter.
Jyoti CNC Automation also witnessed a reduction in mutual fund holdings during the March quarter.
Mutual fund stake declined to 11.84% from 12.21% in December 2025. The stock has corrected nearly 46% over the past year.
Awfis Space Solutions saw mutual fund holdings ease to 35.49% from 35.98%, while Medi Assist Healthcare Services recorded a decline to 36.39% from 36.93%.
Despite the reduction, both companies continue to maintain relatively high institutional ownership levels compared to several peers.
Bajaj Electricals reported a slight decline in mutual fund holding to 16.88% from 17.08%, while Quess Corp witnessed a marginal reduction to 9.29% from 9.30%.
Both stocks have remained under pressure over the past year amid broader weakness in select mid and smallcap segments.
Other companies where mutual funds reduced holdings during the March quarter include Updater Services, Blue Jet Healthcare, Camlin Fine Sciences, Epigral, Eureka Forbes, S H Kelkar and Company, and Alok Industries.
Several of these stocks have reported sharp corrections ranging between 26% and 65% over the past year.
While several smallcap counters have witnessed steep declines, the broader market trend remains mixed.
According to the data, nearly 25 stocks in the analysed universe delivered double-digit returns over the past one year, with nine stocks rising more than 50%. Some counters reportedly surged as much as 375% during the period.
At the same time, around 12 stocks recorded declines ranging between 35% and 65%, highlighting the sharp divergence in the smallcap segment.
The latest mutual fund shareholding data suggests a more selective and cautious institutional approach towards smallcap stocks after a phase of aggressive accumulation. Investors are likely to closely monitor future fund allocation trends and company fundamentals amid continued volatility in the broader smallcap space.
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 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.
Published on: May 27, 2026, 8:34 AM IST
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