Which sectors did mutual funds prefer in July 2025?

18 Aug 2025 , 08:19 AM

SECTORS PREFERRED BY MUTUAL FUNDS IN JULY 2025?

Which were the most preferred sectors for mutual  funds in July 2025? Since one-month change may give a skewed picture, we have looked at a 1-year change picture as of July 2025. In absolute terms; BFSI, Pharmaceuticals, Retail, Chemicals, and Telecom were the most preferred sectors; largely expected. In terms of MOM percentage change; Retail, Aviation, Ratings, and Agri Products were the most preferred sectors.

There is another perspective. In this analysis, we look at MF equity holdings overall (including equity holdings in hybrid and passive funds). As of July 2025; while active equity fund AUM was ₹33.28 Trillion, overall equity holdings of Indian MFs was ₹46.49 Trillion. That means, ₹13.21 Trillion (28.4%) of MF equity holdings was accounted for by the equity portion of hybrid and index funds.

SECTORS WITH MF AUM ABOVE ₹1 TRILLION

The overall equity AUM of all mutual funds stood at ₹46.49 Trillion in July 2025; compared ₹47.11 Trillion in June, ₹44.89 Trillion in May, and ₹42.64 Trillion in April 2025. July 2025 AUM is 14.4% higher than the AUM of ₹40.65 Trillion in the year ago period.

Sectors	July 2024	April 2025	July 2025	July 2025
Banking & Finance	11,06,547	12,73,983	13,82,280	13,67,159
Auto & Auto Ancillaries	3,94,724	3,72,885	4,08,142	4,09,370
Pharmaceuticals	3,27,074	3,65,306	3,89,967	4,05,096
IT-Services	3,90,629	3,82,249	4,14,596	3,96,676
Oil & Gas	2,58,470	2,65,215	2,82,364	2,67,780
FMCG	2,16,734	2,13,122	2,22,952	2,28,842
Capital Goods	1,56,673	1,43,478	1,80,118	1,78,743
Retail	1,00,001	1,36,480	1,74,847	1,77,839
Telecom	1,23,408	1,41,922	1,57,740	1,48,884
Chemicals & Fertilisers	1,13,316	1,19,398	1,45,119	1,43,106
Metals & Mining	1,34,226	1,29,730	1,43,578	1,38,521
Power	1,32,130	1,30,436	1,35,841	1,31,868
Infrastructure	1,33,680	1,17,571	1,33,482	1,31,434
Consumer Durables	92,646	86,313	1,01,573	1,07,323
Construction Materials	88,242	93,359	99,069	1,00,293

Data Source: AMFI, MF Websites (₹ in Crore)

These top 15 sectors with AUM above ₹1 Trillion account for 93.2% of total equity AUM of Indian mutual funds. The list almost matches with the most heavyweight sectors on the index. If you look at the 5 most preferred sectors by mutual funds in terms of exposure, Pharmaceuticals is interesting, despite not being an index heavyweight. Capital Goods, Retail, Telecom, and Chemicals have built heft in recent months.

SECTORS WITH THE BEST YOY AUM ACCRETION IN JULY 2025

Absolute AUM accretion may be vulnerable to the size effect, but they are essential to understand the changes that are most significant to the market cap.

Sectors	July 2024	July 2025	AUM Change	(% Change)
Banking & Finance	11,06,547	13,67,159	2,60,612	23.60%
Pharmaceuticals	3,27,074	4,05,096	78,022	23.90%
Retail	1,00,001	1,77,839	77,838	77.80%
Chemicals & Fertilisers	1,13,316	1,43,106	29,790	26.30%
Telecom	1,23,408	1,48,884	25,476	20.60%
Capital Goods	1,56,673	1,78,743	22,070	14.10%
Consumer Durables	92,646	1,07,323	14,678	15.80%
Auto & Auto Ancillaries	3,94,724	4,09,370	14,646	3.70%
Aviation	22,060	36,059	13,998	63.50%
FMCG	2,16,734	2,28,842	12,107	5.60%
Construction Materials	88,242	1,00,293	12,051	13.70%
Oil & Gas	2,58,470	2,67,780	9,309	3.60%
IT-Services	3,90,629	3,96,676	6,047	1.60%
Agri	14,486	19,319	4,833	33.40%
Metals & Mining	1,34,226	1,38,521	4,295	3.20%

Data Source: AMFI, MF Websites (₹ in Crore)

There are some interesting ideas. In the top-5, only BFSI is an index heavyweight. Other significant AUM accretion stories like Pharma, Retail, Chemicals, and Telecom have added rupee market cap, despite being index lightweights overall. While Pharma has attracted attention as a retail bet, Retail is all about digital alpha. Among the others, telecom may be largely a Bharti Airtel story, but chemicals are an affirmative bet that Indian chemical stocks will play a more significant role in the global value chain.

SECTORS WITH BEST PERCENTAGE AUM ACCRETION

To neutralize size effect, we also look at the percentage change in AUM on a yoy basis, to give credit to smaller sized sectors that score high.

Sectors	July 2024	July 2025	AUM Change	(% Change)
Retail	1,00,001	1,77,839	77,838	77.80%
Aviation	22,060	36,059	13,998	63.50%
Ratings	3,268	4,575	1,307	40.00%
Agri	14,486	19,319	4,833	33.40%
Chemicals & Fertilisers	1,13,316	1,43,106	29,790	26.30%
Pharmaceuticals	3,27,074	4,05,096	78,022	23.90%
Banking & Finance	11,06,547	13,67,159	2,60,612	23.60%
Telecom	1,23,408	1,48,884	25,476	20.60%
Diamond  &  Jewellery	25,104	29,344	4,240	16.90%
Consumer Durables	92,646	1,07,323	14,678	15.80%
Capital Goods	1,56,673	1,78,743	22,070	14.10%
Construction Materials	88,242	1,00,293	12,051	13.70%
Others	34,059	37,315	3,256	9.60%
Alcohol	25,216	27,455	2,238	8.90%
FMCG	2,16,734	2,28,842	12,107	5.60%

Data Source: AMFI, MF Websites (₹ in Crore)

We ignored the miscellaneous sector as it does not convey any clear message. Retail is right at the top with 77.8% growth in AUM, thanks to MF interest in Eternal (formerly Zomato) and Swiggy. Aviation is at the top with relative AUM growth of 63.5%, thanks to the rally in Interglobe Aviation (Indigo Airways). Others like ratings and agri are on a much smaller base. What is interesting is the presence of sectors like chemicals, pharma, and BFSI on both lists.

Did any sector witness percentage depletion in AUM? The negative list includes Abrasives, Media, Plastic Products, Paper, infrastructure, power, and shipping. Most of these are bottom-up stories. The good news is that the overhang of global macro risks appears to have had limited impact on mutual funds appetite for equities.