SECTORS PREFERRED BY MUTUAL FUNDS IN JULY 2025?
Which were the most preferred sectors for mutual funds in July 2025? Since one-month change may give a skewed picture, we have looked at a 1-year change picture as of July 2025. In absolute terms; BFSI, Pharmaceuticals, Retail, Chemicals, and Telecom were the most preferred sectors; largely expected. In terms of MOM percentage change; Retail, Aviation, Ratings, and Agri Products were the most preferred sectors.
There is another perspective. In this analysis, we look at MF equity holdings overall (including equity holdings in hybrid and passive funds). As of July 2025; while active equity fund AUM was ₹33.28 Trillion, overall equity holdings of Indian MFs was ₹46.49 Trillion. That means, ₹13.21 Trillion (28.4%) of MF equity holdings was accounted for by the equity portion of hybrid and index funds.
SECTORS WITH MF AUM ABOVE ₹1 TRILLION
The overall equity AUM of all mutual funds stood at ₹46.49 Trillion in July 2025; compared ₹47.11 Trillion in June, ₹44.89 Trillion in May, and ₹42.64 Trillion in April 2025. July 2025 AUM is 14.4% higher than the AUM of ₹40.65 Trillion in the year ago period.
| Sectors | July 2024 | April 2025 | July 2025 | July 2025 |
| Banking & Finance | 11,06,547 | 12,73,983 | 13,82,280 | 13,67,159 |
| Auto & Auto Ancillaries | 3,94,724 | 3,72,885 | 4,08,142 | 4,09,370 |
| Pharmaceuticals | 3,27,074 | 3,65,306 | 3,89,967 | 4,05,096 |
| IT-Services | 3,90,629 | 3,82,249 | 4,14,596 | 3,96,676 |
| Oil & Gas | 2,58,470 | 2,65,215 | 2,82,364 | 2,67,780 |
| FMCG | 2,16,734 | 2,13,122 | 2,22,952 | 2,28,842 |
| Capital Goods | 1,56,673 | 1,43,478 | 1,80,118 | 1,78,743 |
| Retail | 1,00,001 | 1,36,480 | 1,74,847 | 1,77,839 |
| Telecom | 1,23,408 | 1,41,922 | 1,57,740 | 1,48,884 |
| Chemicals & Fertilisers | 1,13,316 | 1,19,398 | 1,45,119 | 1,43,106 |
| Metals & Mining | 1,34,226 | 1,29,730 | 1,43,578 | 1,38,521 |
| Power | 1,32,130 | 1,30,436 | 1,35,841 | 1,31,868 |
| Infrastructure | 1,33,680 | 1,17,571 | 1,33,482 | 1,31,434 |
| Consumer Durables | 92,646 | 86,313 | 1,01,573 | 1,07,323 |
| Construction Materials | 88,242 | 93,359 | 99,069 | 1,00,293 |
Data Source: AMFI, MF Websites (₹ in Crore)
These top 15 sectors with AUM above ₹1 Trillion account for 93.2% of total equity AUM of Indian mutual funds. The list almost matches with the most heavyweight sectors on the index. If you look at the 5 most preferred sectors by mutual funds in terms of exposure, Pharmaceuticals is interesting, despite not being an index heavyweight. Capital Goods, Retail, Telecom, and Chemicals have built heft in recent months.
SECTORS WITH THE BEST YOY AUM ACCRETION IN JULY 2025
Absolute AUM accretion may be vulnerable to the size effect, but they are essential to understand the changes that are most significant to the market cap.
| Sectors | July 2024 | July 2025 | AUM Change | (% Change) |
| Banking & Finance | 11,06,547 | 13,67,159 | 2,60,612 | 23.60% |
| Pharmaceuticals | 3,27,074 | 4,05,096 | 78,022 | 23.90% |
| Retail | 1,00,001 | 1,77,839 | 77,838 | 77.80% |
| Chemicals & Fertilisers | 1,13,316 | 1,43,106 | 29,790 | 26.30% |
| Telecom | 1,23,408 | 1,48,884 | 25,476 | 20.60% |
| Capital Goods | 1,56,673 | 1,78,743 | 22,070 | 14.10% |
| Consumer Durables | 92,646 | 1,07,323 | 14,678 | 15.80% |
| Auto & Auto Ancillaries | 3,94,724 | 4,09,370 | 14,646 | 3.70% |
| Aviation | 22,060 | 36,059 | 13,998 | 63.50% |
| FMCG | 2,16,734 | 2,28,842 | 12,107 | 5.60% |
| Construction Materials | 88,242 | 1,00,293 | 12,051 | 13.70% |
| Oil & Gas | 2,58,470 | 2,67,780 | 9,309 | 3.60% |
| IT-Services | 3,90,629 | 3,96,676 | 6,047 | 1.60% |
| Agri | 14,486 | 19,319 | 4,833 | 33.40% |
| Metals & Mining | 1,34,226 | 1,38,521 | 4,295 | 3.20% |
Data Source: AMFI, MF Websites (₹ in Crore)
There are some interesting ideas. In the top-5, only BFSI is an index heavyweight. Other significant AUM accretion stories like Pharma, Retail, Chemicals, and Telecom have added rupee market cap, despite being index lightweights overall. While Pharma has attracted attention as a retail bet, Retail is all about digital alpha. Among the others, telecom may be largely a Bharti Airtel story, but chemicals are an affirmative bet that Indian chemical stocks will play a more significant role in the global value chain.
SECTORS WITH BEST PERCENTAGE AUM ACCRETION
To neutralize size effect, we also look at the percentage change in AUM on a yoy basis, to give credit to smaller sized sectors that score high.
| Sectors | July 2024 | July 2025 | AUM Change | (% Change) |
| Retail | 1,00,001 | 1,77,839 | 77,838 | 77.80% |
| Aviation | 22,060 | 36,059 | 13,998 | 63.50% |
| Ratings | 3,268 | 4,575 | 1,307 | 40.00% |
| Agri | 14,486 | 19,319 | 4,833 | 33.40% |
| Chemicals & Fertilisers | 1,13,316 | 1,43,106 | 29,790 | 26.30% |
| Pharmaceuticals | 3,27,074 | 4,05,096 | 78,022 | 23.90% |
| Banking & Finance | 11,06,547 | 13,67,159 | 2,60,612 | 23.60% |
| Telecom | 1,23,408 | 1,48,884 | 25,476 | 20.60% |
| Diamond & Jewellery | 25,104 | 29,344 | 4,240 | 16.90% |
| Consumer Durables | 92,646 | 1,07,323 | 14,678 | 15.80% |
| Capital Goods | 1,56,673 | 1,78,743 | 22,070 | 14.10% |
| Construction Materials | 88,242 | 1,00,293 | 12,051 | 13.70% |
| Others | 34,059 | 37,315 | 3,256 | 9.60% |
| Alcohol | 25,216 | 27,455 | 2,238 | 8.90% |
| FMCG | 2,16,734 | 2,28,842 | 12,107 | 5.60% |
Data Source: AMFI, MF Websites (₹ in Crore)
We ignored the miscellaneous sector as it does not convey any clear message. Retail is right at the top with 77.8% growth in AUM, thanks to MF interest in Eternal (formerly Zomato) and Swiggy. Aviation is at the top with relative AUM growth of 63.5%, thanks to the rally in Interglobe Aviation (Indigo Airways). Others like ratings and agri are on a much smaller base. What is interesting is the presence of sectors like chemicals, pharma, and BFSI on both lists.
Did any sector witness percentage depletion in AUM? The negative list includes Abrasives, Media, Plastic Products, Paper, infrastructure, power, and shipping. Most of these are bottom-up stories. The good news is that the overhang of global macro risks appears to have had limited impact on mutual funds appetite for equities.
