Mutual funds go big on private banks in January amid market volatility

Mutual funds deploy Rs 15,400 crore in HDFC Bank and ICICI Bank during January volatility; private lenders account for 45% of net equity buys

Mutual funds (MFs) stepped up buying in private-sector bank stocks amid January’s market turbulence, deploying significant capital into the segment. HDFC Bank and ICICI Bank emerged as the biggest buys, with schemes collectively purchasing shares worth nearly ₹15,400 crore during the month. Kotak Mahindra Bank also featured among the top five most-bought stocks, attracting investments of around ₹3,000 crore, according to an analysis by Nuvama Alternative & Quantitative Research. 

Investments in these three stocks accounted for 45 per cent of net equity purchases by MFs in January. According to data from the Securities and Exchange Board of India (Sebi), MFs invested a total of ₹40,514 crore in equities during the month. 

The three banking stocks also ranked among the top additions by MF schemes over the past three months, the analysis showed. 

Private-bank stocks, particularly major names such as HDFC Bank, have been drawing renewed investor interest as valuations softened following a subdued after-Covid run. The segment’s underperformance relative to public-sector banks became especially pronounced in 2025. 

Apart from the three lenders, Biocon and Reliance Industries saw strong buying interest in January. On the other hand, Hindalco Industries, MCX, Vedanta, State Bank of India, and Polycab were among the most sold stocks.

 

In the midcap and smallcap space, Amagi Media Labs, Shadowfax Technologies, Aavas Financiers, Amber Enterprises, and Dalmia Bharat attracted the highest MF investments during the month.