Mutual funds increased their stakes across a diverse portfolio of stocks during Q3 FY26, spanning consumer appliances, food technology, banking, healthcare services, manufacturing, and apparel sectors. These strategic moves signal rising institutional confidence in select sector leaders and companies with turnaround potential.

Changes in mutual fund shareholding patterns often provide early indicators of institutional conviction. The December 2025 quarter witnessed meaningful stake additions across several well-known companies, reflecting fund managers' selective positioning toward businesses demonstrating improving fundamentals, scalable business models, and long-term growth visibility.

Technology and Consumer Platforms

Swiggy emerged as a significant beneficiary of institutional interest. The consumer-first technology company, which operates through a unified convenience platform app, saw mutual fund holdings increase substantially during the quarter.

Eternal, one of the leading online food service platforms, also attracted increased mutual fund attention. Despite trading at a premium valuation, institutional investors boosted their stake in the company.

Consumer Appliances and Manufacturing

Whirlpool, a leading manufacturer and marketer of major home appliances promoted by Whirlpool Corporation USA, witnessed significant institutional buying. The company's strong market position in kitchen and laundry appliances attracted fund manager attention.

PG Electroplast (PGEL), specializing in original design manufacturing and plastic injection moulding, saw notable stake increases. The company's subsidiary PG Technoplast manufactures air conditioners, coolers, and consumer durable components.

Banking Sector Developments

The banking sector witnessed varied institutional interest, with mutual funds significantly increasing exposure to select banks.

Bank of Maharashtra showed the most dramatic increase in mutual fund interest, with holdings jumping from 1.17% to 5.32%. The bank's attractive valuation metrics, trading below industry PE, likely contributed to institutional appeal.

Healthcare and Pharmaceuticals

Sagility, providing healthcare-focused technology-enabled solutions primarily to U.S.-based clients, attracted institutional attention following its November 2024 listing.

Akums Drugs & Pharmaceuticals, a contract development and manufacturing organization, also saw increased institutional interest with mutual fund holdings rising from 6.44% to 11.23%.

Apparel Sector

Page Industries, India's leading apparel company and exclusive licensee of Jockey International, maintained institutional favor despite premium valuations. The company's strong pan-India distribution network and brand-led growth strategy continue attracting fund managers.

These strategic stake increases across diverse sectors demonstrate mutual funds' confidence in select companies' long-term prospects, despite varying market conditions and sector-specific challenges.

Source: https://tradebrains.in/swiggy-eternal-whirlpool-and-other-stocks-in-which-mf-increased-their-stake-in-q3-fy26/

The small-cap mutual fund segment has demonstrated resilience amid market turbulence, with nearly 90% of funds outperforming the BSE SmallCap index despite facing significant headwinds. While the broader index declined sharply by 21% since December 2024, active fund management has proven its worth by cushioning investor losses, though no fund managed to deliver positive returns during this period.

Fund Performance Analysis

The performance data reveals a clear distinction between top-performing and underperforming funds within the small-cap category:

Several funds faced more severe corrections, with JM Small Cap Fund, Kotak Small Cap Fund, Tata Small Cap Fund, HSBC Small Cap Fund, and LIC MF Small Cap Fund posting losses between 15%-20%.

Valuation Metrics Remain Elevated

Despite the sharp correction, valuation concerns persist across the small-cap segment. The BSE SmallCap index currently trades at a P/E ratio of 24.06, while individual fund portfolios show varying valuation levels:

PGIM India Small Cap Fund trades at an elevated P/E of 61.81, reflecting the varied valuation landscape within the category.

Expert Perspectives on Market Outlook

Tejas Sheth, Fund Manager at Axis Mutual Fund, emphasizes the inherent nature of small-cap investments as high-risk, high-return products. He notes that small-cap funds typically generate 200-300 basis points more than mid-cap funds over the long term, with historical returns averaging 18%-20% CAGR. The 2020-2024 phase saw outsized gains due to strong GDP growth, but markets are now normalizing toward historical averages.

Sachin Jain, Managing Partner at Scripbox, advocates for disciplined asset allocation, preferring large caps for most investors. He suggests that small- and mid-cap allocation should be limited to aggressive investors and assessed individually, recommending staggered SIPs or STPs over lump sum investments for those with a five to seven-year investment horizon.

Investment Strategy Recommendations

Shweta Rajani from Anand Rathi Wealth maintains a positive long-term outlook for small caps, noting that the segment is currently in a repricing phase. She highlights that small caps typically undergo mean reversion for 3-5 years after delivering strong performance, with historical drawdowns of 20-25% from peak levels being normal. Recovery periods usually begin within 18-24 months of such corrections.

Rajani points out that valuations have corrected meaningfully and are now trading at a negative froth of around -12.80%, suggesting the segment is approaching attractive valuation levels for long-term investors. Financial advisors continue emphasizing the importance of discipline and proper asset allocation, particularly as many investors chase past returns rather than following structured investment plans.