Mutual Funds Exit 9 Midcap Shares in January 2025

Mutual fund firms regularly rebalance their funds to generate the best returns, either by increasing their position in potential firms or by selling off those that fall out of favor with their investment thesis. Six of India’s largest mutual fund firms in January 2025 started large exits from nine midcap shares, according to the reports. Below is a detailed outline of the sale of stocks for each fund.

1. HDFC Mutual Fund

HDFC Mutual Fund exited Tata Chemicals entirely in January by selling 37.17 lakh shares. Its exit indicates a change in portfolio preference, perhaps to industries with more growth prospects or stable revenues. Tata Chemicals is one of the players in the chemical and specialty chemicals industries and has had a volatile performance that has led some investors to re-evaluate their holdings.

2. SBI Mutual Fund

SBI Mutual Fund closed out its entire stake in Persistent Systems, selling 1.52 lakh shares in January. Persistent Systems, a midcap IT services company, has been a previous top performer but may have been impacted by changing global IT expenditure patterns. The fund’s exit could reflect a shift to other technology stocks or sectors with improved near-term visibility.

3. Axis Mutual Fund

Axis Mutual Fund chose to exit Tata Technologies by selling 5.64 lakh shares in January. Tata Technologies is a subsidiary of Tata Motors and deals in the engineering and technology services business, where there exists a commanding business in the automotive sector. Cyclical industry and changing trends towards electric vehicles may have led the fund to withdraw its stakes and invest in stable stocks providing regular long-term growth.

4. Nippon India Mutual Fund

Nippon India Mutual Fund disposed of two of the biggest midcap stocks in January:

• Zee Entertainment, where it offloaded a record 1.78 crore shares. Zee Entertainment has seen volatility due to sectoral issues and corporate governance issues, which may have prompted the fund to sell off the entire share.
• IRCTC, wherein 7.64 lakh shares were sold. IRCTC is a prominent stock in the travel and tourism sector that has been hit hard by market volatility. The move by the fund can be explained by valuations or expected changes in government policies that influence the future performance of the stock.

5. Quant Mutual Fund

Quant Mutual Fund made one of the largest exits by selling its holdings in three midcap shares in January:

• Poonawalla Fincorp, disposing of 1.47 crore shares. Poonawalla Fincorp is a large NBFC and a popular midcap financial share that may have been sold owing to changing market trends in the lending space.
• Ramco Cement, where 9.94 lakh shares were offloaded. Cement space is dependent on infrastructure and real estate growth, and a shift in the demand-supply dynamics may have led to this offload.
• Gland Pharma, in which 10.58 lakh shares were sold. Curiously, only Quant Mid Cap Fund disposed of Gland Pharma, which indicates selective selling within the fund house. Gland Pharma has been weak in the pharma sector, possibly influencing this action.

6. ICICI Prudential Mutual Fund

ICICI Prudential Mutual Fund said goodbye to Indian Hotels, selling 7.34 lakh shares in January. Interestingly, only ICICI Prudential Multicap Fund exited this stock. Indian Hotels, as one of the major players in the hospitality sector, has been performing well in the post-pandemic scenario. However, valuation concerns or profit-booking motives might have forced the fund to seek an exit.

Portfolio Reshuffling Trends

The exits by these mutual funds are part of ongoing portfolio realignments based on sectoral trends, stock valuations, and market sentiment. Although midcap stocks have shown strong growth potential, fund managers may be rebalancing their portfolios to reduce risk exposure or revise capital into other compelling opportunities.

Because mutual funds invest actively, retail investors can be encouraged to follow portfolio movements and consider the relevance of such decisions to their own investment strategy. Tracking the movements of mutual funds can serve as an important way to monitor market mood and sectoral activity.