Mutual Fund Divested Over Rs. 16,000 Crore in Equities Over the Last Six Sessions

Experts highlighted that mutual funds have been actively selling Indian equities over the past six sessions to take advantage of rising prices and make profits.

In 2025 so far, mutual funds have invested over Rs. 1.08 lakh crore in Indian stocks, while in 2024, they bought over Rs. 4.3 lakh crore.

Mutual Funds sold equities worth over Rs. 16,000 crore between March 20 and March 28. Analysts believe that it was due to profit booking after recent market gains. However, earlier in the month, between March 1 and 19, they were net buyers, investing over Rs. 22,900 crore in equities.

In March, benchmark indices Sensex and Nifty hiked 5.8% and 6.3%, respectively. The broader BSE MidCap and SmallCap indices performed even better, surging 7.6% and 8.3%, respectively. Even though Mutual funds’ cash holding in active equity funds increased to Rs. 1.46 lakh crore in February 2025 from Rs. 1.42 lakh crore in January.

Experts suggest that this increasing cash reserve indicates concerns regarding the valuations and market direction. Even after a 12% decline from recent peaks, fund managers remain cautious because of the unpredictability related to global economic conditions, including US tariffs.

An expert explained that mutual funds are being cautious due to the sharp decline in small and mid-cap stocks, which had become overpriced. The Fund manager’s decision to hold more cash is not a sign of negative outlook about the market but rather a careful risk-management strategy. Fund managers are expected to wait for better market conditions before making new investments.

The increasing cash reserves are also a sign of a defensive strategy to protect investors’ capital against market dips while keeping funds ready to get better investment opportunities. As per research, this trend could reverse once the Indian market stabilizes, particularly as concerns over global tariffs and foreign investor (FII) selling.

As India’s economy improves and inflation cools, the upcoming fourth-quarter earnings will play a significant role in driving the attention of investors toward the stock market in the coming months. Experts believe that mutual funds are holding onto cash as part of a wait-and-watch strategy that allows them to book profits at the right time while managing market ups and downs.