- The Stocks Mutual Funds Trimmed in Q1 2026
- What the Data Shows: Stake Changes and Price Returns
- Why Were These Stocks Being Trimmed?
- Where Flexi Cap Funds Were Adding Exposure
- Sold vs. Added: The Broad Pattern
- Things to Keep in Mind
- The Bottom Line
Mutual funds spent two consecutive quarters, June to December 2025, building positions in a set of midcap stocks. By March 2026, they were trimming those same positions. At the same time, flexi cap fund portfolios from May 2026 show fresh buying in defence, power and capital market stocks.
This blog covers which midcap stocks saw reduced mutual fund holdings in Q1 2026, by how much, and where flexi cap funds were adding exposure around the same period.
The Stocks Mutual Funds Trimmed in Q1 2026
Between June and December 2025, mutual funds consistently accumulated a set of BSE midcap stocks over two quarters. In the March 2026 quarter, that changed. Fund houses reduced holdings in 13 midcap stocks, most of which had fallen between 10% and 29% in calendar year 2026.
What the Data Shows: Stake Changes and Price Returns
Stocks Down More Than 20% in CY26
| Stock | MF Stake Dec '25 (%) | MF Stake Mar '26 (%) | Change (pp) | CY26 Return |
| Procter & Gamble Hygiene | 8.81 | 8.65 | –0.16 | –29% |
| Kalyan Jewellers India | 14.54 | 13.63 | –0.91 | –27% |
| Escorts Kubota | 10.24 | 9.82 | –0.42 | –25% |
| Patanjali Foods | 3.32 | 2.25 | –1.07 | –23% |
| AWL Agri Business | 9.01 | 8.17 | –0.84 | –22% |
| Ashok Leyland | 8.32 | 7.92 | –0.40 | –21% |
Stocks Down 15–20% in CY26
| Stock | MF Stake Dec '25 (%) | MF Stake Mar '26 (%) | Change (pp) | CY26 Return |
| Godrej Properties | 7.38 | 5.45 | –1.93 | –18% |
| L&T Finance | 11.86 | 11.54 | –0.32 | –17% |
| PI Industries | 22.00 | 21.81 | –0.19 | –17% |
| Indraprastha Gas | 10.71 | 9.46 | –1.25 | –16% |
Stocks Down 10–14% in CY26
| Stock | MF Stake Dec '25 (%) | MF Stake Mar '26 (%) | Change (pp) | CY26 Return |
| Clean Science and Technology | 13.53 | 12.49 | –1.04 | –12% |
| Housing & Urban Dev Corp | 3.00 | 2.51 | –0.49 | –10% |
| 3M India | 7.40 | 7.38 | –0.02 | –10% |
One thing to note before reading further: the stake cuts range from 0.02 percentage points (3M India) to 1.93 percentage points (Godrej Properties). Not all reductions carry the same weight.
Why Were These Stocks Being Trimmed?
1. Price Declines Weakened the Original Case
Most stocks on this list fell sharply in CY26. Procter & Gamble Hygiene dropped 29%. Kalyan Jewellers fell 27%. Escorts Kubota was down 25%. When a stock underperforms after a period of accumulation, funds reassess whether to maintain the position size.
The selling and the price decline appear to move together, though it is not always clear which came first.
2. The Cuts Were Not Equal, Scale Matters
Godrej Properties saw mutual fund holdings fall by 1.93 percentage points. Indraprastha Gas fell by 1.25 percentage points. Patanjali Foods by 1.07 percentage points. These are meaningful reductions.
On the other end, 3M India saw a cut of just 0.02 percentage points, and PI Industries by 0.19 percentage points. These are minor adjustments, not exits. Mutual funds still hold positions in most stocks on this list; reduced is not the same as sold out.
Where Flexi Cap Funds Were Adding Exposure
While some midcap positions were reduced, flexi-cap fund portfolio disclosures for May 2026 show fresh buying in three specific areas.
1. Defence and Manufacturing
Motilal Oswal Flexi Cap Fund added Bharat Dynamics, BHEL and Premier Energies. JM Flexi Cap Fund introduced Titagarh Rail Systems to its portfolio and increased its holding in Larsen & Toubro. Helios Flexi Cap Fund added Solar Industries, which has a growing defence business, and Samvardhana Motherson.
2. Power and Energy Infrastructure
Motilal Oswal Flexi Cap Fund increased its exposure to Siemens. Helios Flexi Cap Fund raised its allocation to Power Grid Corporation of India. Premier Energies also featured as a fresh addition by Motilal Oswal.
3. Capital Market Infrastructure
Helios Flexi Cap Fund added Computer Age Management Services (CAMS) and increased its holding in BSE. HDFC Flexi Cap Fund added ICICI Prudential Asset Management Company and Nippon Life India Asset Management to its portfolio.
CAMS and BSE are companies that earn revenue from mutual fund transactions and stock exchange activity, so more retail participation directly benefits their business.
Sold vs. Added: The Broad Pattern
| What Was Trimmed | Sector | What Was Added | Sector |
| P&G Hygiene, Patanjali Foods | Consumer goods | CAMS, BSE, ICICI Pru AMC, Nippon AMC | Capital market infrastructure |
| Escorts Kubota, Ashok Leyland | Auto and auto-adjacent | BHEL, Bharat Dynamics, Titagarh Rail | Defence and manufacturing |
| Godrej Properties | Real estate | Power Grid Corp, Siemens, Premier Energies | Power and energy |
| Indraprastha Gas | Gas utilities | L&T, Samvardhana Motherson | Capex-linked industrials |
This is a broad pattern read across two datasets. Individual fund decisions will vary, not every fund sold every stock on the left or bought every stock on the right.
Things to Keep in Mind
- The midcap selling data is from March 2026, and the flexi cap buying data is from May 2026, a two-month gap. The rotation direction is consistent, but these are not simultaneous snapshots
- Stake cuts in the midcap list range from 0.02 pp to 1.93 pp; look at the size of the reduction, not just whether it appears on the list
- Funds still hold positions in most trimmed stocks; a reduced stake is not the same as an exit
- Portfolio disclosures are published with a lag; by the time this data is public, fund positions may have already changed
- This data covers a specific set of funds and stocks, not the mutual fund industry as a whole. The pattern shown here is directional, not universal
The Bottom Line
Mutual fund data from early 2026 shows a reduction in holdings across consumer goods, auto, real estate and gas utility names in the midcap space. Around the same period, flexi cap funds were adding to defence, power and capital market stocks. The data points to a portfolio shift in terms of sector preference, but portfolio disclosures are backwards-looking; they show where funds were positioned, not where they are today or where they will be tomorrow.