How MFs churned large caps, mid-caps, and small caps in May 2026

How MFs churned large caps, mid-caps, and small caps in May 2026

Here is a quick look at how mutual funds churned their portfolios in May 2026 at a macro level. The view is a macro view of all the mutual funds combined, and then a granular view across how the holding shifts panned out across large cap, mid-cap, and small cap stocks.

MUTUAL FUNDS - LARGE CAP CHURN IN MAY 2026

The table below captures the 5 large cap stocks seeing the biggest percent increase in MF holdings and the 5 large cap stocks seeing the biggest percent fall in holdings in May 2026.

Let us look at the large cap buy side first. FMCG appears to be attracting buying after a long gap, with TCPL and Britannia appearing in the top-10. Adani group, which has recovered the losses of 2022 and more, had 2 out of the top-5 buys for mutual funds. Despite the expectations of a spike in interest rates, rate sensitives like financials and auto stocks were in demand as mutual funds expect the consumer story to overpower the rate hike story.

What about the MF selling in large caps? There appear to be some concerns over PSU owned companies in the large cap space, with 4 out of the top-10 being PSU stocks. In the case of Vedanta, the selling was triggered more by the restructuring and the prospects of tax harvesting. In case of PSU stocks, it was more a case of booking out after a sharp rally, especially on expectations of pressure on government finances. Power saw profit taking.

MUTUAL FUNDS - MID CAP CHURN IN MAY 2026

The table below captures the 5 mid-cap stocks seeing the biggest percent increase in MF holdings and the 5 mid-cap stocks seeing the biggest percent fall in holdings in May 2026.

Mutual funds are clearly preferring the digital story in the mid-cap space. Three out of the top-10 viz. Lenskart, Groww, and Naukri are digital plays. While FMEG saw a shift from Polycab to Havells on relatively better valuations, HPCL saw selling on concerns that its profits may get impacted due to the limited increase in downstream petrol and diesel prices. Financials continued to dominate, but more on the financial inclusion front.

What about the MF selling in mid-caps? Like in the case of large caps, even mid-caps saw heavy selling in PSUs. In fact, 6 out of the top-10 mid-cap sells were PSU stocks. In terms of sectoral exposure, BFSI was the most impacted in MF selling. As has been the case in the past, MF selling in mid-caps has been more of a bottom-up story, rather than top-down.

MUTUAL FUNDS - SMALL CAP CHURN IN MAY 2026

The table below captures the 5 small cap stocks seeing the biggest percent increase in MF holdings and the 5 small cap stocks seeing the biggest fall in precent holdings in May 2026.

Central Bank appears to have attracted a lot of small-cap buying by MFs, especially after the aggressive growth outlook given by the bank. Gujarat Energy, created by the amalgamation of GSPC and Gujarat Gas, has attracted a lot of buying interest with the merged entity’s interests spanning upstream and downstream gas. On the sell side, the mutual funds booked out of several small cap companies, where the story appears to have played out.

What is the overall picture that emerges from the fund buying and selling across capitalization? Mutual funds continue to bet on rate sensitives like BFSI and auto stocks, despite the risk of rate hikes. They see rate hikes as less of a risk compared to the potential of these companies to dominate the consumer mind-space. Digital appears to be an overpowering theme for MFs to select smaller stocks!