Mutual funds implemented a significant strategic shift in May 2026, increasing exposure to banking, oil and gas, internet and new-age technology stocks while sharply trimming holdings in IT, metals, and power equipment names. According to reports from Essential Business Intelligence, this sectoral reshuffle reflects fund managers' continued deployment of inflows into large private lenders and internet-focused businesses, while simultaneously booking profits in sectors that have experienced strong rallies over the past year.
Among large-cap stocks, mutual fund houses increased exposure in ICICI Bank, HDFC Bank, Adani Enterprises, Reliance Industries and Eternal. On the selling side, funds reduced exposure to Infosys, Vedanta, Bank of Baroda, State Bank of India and Polycab India. As reported by Essential Business Intelligence, banking stocks attracted the strongest buying interest from mutual funds during the month, alongside oil & gas companies and new-age technology and internet businesses.
In the mid-cap segment, mutual funds added exposure to Lenskart, Billionbrains (Groww), JSW Energy, PB Fintech and Indus Towers. Meanwhile, holdings in GE Vernova T&D, BSE, Hitachi Energy, Oracle Financial Services Software and SAIL were pared. According to the report, this rotation reflects fund managers' preference for internet and energy-focused businesses over traditional power equipment and industrial stocks.
Among small-cap stocks, mutual funds bought Gujarat Gas, Indraprastha Gas, Sona BLW Precision Forgings, Pine Labs and Bandhan Bank. Selling was seen in MTAR Technologies, Cohance Lifesciences, GE Shipping, E2E Networks and CEAT. As reported by Essential Business Intelligence, this preference for gas utilities and financial services companies over technology and shipping stocks aligns with the overall trend toward defensive and growth-oriented investments.
