Mutual funds increase investments in PSU banks in January; weight hits 3-year high

Mutual funds increased their investments in the Public Sector Undertaking (PSU) banks in January, with the allocation rising to a three-year high. The weight climbed to 3.7%, marking a 30 basis point month-on-month increase from 3.4% in October, November, and December 2025.

On a year-on-year basis, the allocation rose by 90 basis points from 2.8% in January 2025, according to a report by Motilal Oswal Financial Services.





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In September 2025, mutual funds increased their investments in the PSU Bank, and the weight climbed to a 17-month high in September. The allocation reached 3.3%, indicating a surge of 30 basis points on a month-on-month basis from 3% in July and August 2025. Every year, the weight jumped by 70 basis points from 2.6% in September 2024.

According to the report, since January 2024, the highest allocation has been 3.5% in February 2024, and from July 2024 to June 2025 the weight remained between 2.8% to 2.9%.

The report further highlighted that the allocation in the BSE 200 index was 4.1%, and some fund houses such as Aditya Birla Sun Life Mutual Fund, HDFC Mutual Fund, Kotak Mutual Fund, Nippon India Mutual Fund, and SBI Mutual Fund, had an allocation of more than 4.1% in the said time period.

According to the report, State Bank of India (SBI) was among the top 5 stocks that witnessed the maximum rise in value. Around 15 funds bought SBI, whereas five funds sold this stock from their portfolio.

State Bank of India was among the top 10 stocks that witnessed the maximum rise in value. Around seven funds bought SBI, whereas 13 sold this stock from their portfolio in January.

“In January’26, the stocks that saw the maximum MoM increase in value were SBI, Axis Bank, ICICI Bank, Bharat Electronics, NTPC, Coal India, Biocon, Tata Steel, UltraTech, and BSE,” the report said.

In terms of value increase MoM, divergent interests were visible within sectors: The top 10 stocks that witnessed the maximum rise in value were SBI (+Rs 96.6b), Axis Bank (+Rs 92.2b), ICICI Bank (+Rs 54.9b), Bharat Electronics (+Rs 52.5b), NTPC (+Rs 34.3b), Coal India (+Rs 30.8b), Biocon (+Rs 27.7b), Tata Steel (+Rs 27.5b), UltraTech (+Rs 20.5b), and BSE (+Rs 20.2b).

State Bank of India was among the top 10 stock holdings for various mutual funds. SBI Mutual Fund bought 62.47 lakh shares of SBI. In the same period, HDFC Mutual Fund sold 35.96 lakh shares, Nippon India Mutual Fund added 1.27 lakh shares, and UTI Mutual Fund sold 6.78 lakh shares.

Axis Mutual Fund and Aditya Birla Sun Life Mutual Fund bought 30.29 lakh and 1.97 lakh shares, respectively. Mirae Asset Mutual Fund and DSP Mutual Fund sold 2.16 lakh and 71,000 shares, respectively.

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Tata Mutual Fund and Canara Robeco Mutual Fund sold 1.82 lakh and 4.25 lakh shares respectively, and lastly Sundaram Mutual Fund bought 3.74 lakh shares of SBI.

There are seven ETFs and one index fund based on PSU banks. Out of these seven ETFs, DSP Nifty PSU Bank ETF and Mirae Asset Nifty PSU Bank ETF gave the highest return of 30.61% in the last six months, followed by HDFC Nifty PSU Bank ETF which gave 30.50%.

SBI BSE PSU Bank Index Fund, the only index fund based on PSU Banks, gained 28.09% in the last six months. NIFTY PSU BANK - TRI went up 30.71% in the last six months.

Private banks

Private banks' weight jumped to an eight-month high in January 2026 to 18.2%, witnessing a jump of 60 basis points on monthly basis and 110 basis points on a yearly basis.

In January 2026, mutual funds showed interest in Banks (Private & PSU), Utilities, Technology, Capital Goods, Metals, and Cement, leading to a MoM rise in their weights. Conversely, Consumer, Oil & Gas, Autos, Healthcare, NBFCs, Telecom, Retail, and Consumer Durables saw a MoM moderation in weights.

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