Market Brief: Mutual Fund Equity Momentum **Institutional Liquidity & Inflows** Mutual funds extended their aggressive buying streak into early **2026**, with total net investments in Indian equities reaching **₹42,354 crore** for January. While the month saw a tactical **14%** dip in net equity inflows to **₹24,028 crore** compared to December, the overall industry assets under management (AUM) climbed to approximately **₹81 lakh crore**. Passive investment vehicles witnessed a significant surge, with Gold ETFs recording a **106%** month-on-month jump, attracting **₹24,039 crore**. **High-Conviction Stock Additions** Institutional conviction remained concentrated in the banking and financial services sectors. An analysis of portfolio shifts shows that **31 stocks** were added across at least **10** different mutual fund schemes during the last month. Performance metrics for these selections remain robust. Out of the newly added stocks, **11** have delivered returns between **50% and 100%** over the past year. Notably, one selection has achieved multibagger status, reflecting the success of institutional "bottom-up" picking strategies. **Sectoral Rotation & Top Picks** Fund managers significantly increased their exposure to Public Sector Undertaking (PSU) banks, pushing the sectoral weight to a **3-year high**. This rotation was fueled by record-breaking quarterly profits, such as State Bank of India's **₹21,028 crore** net profit for the recent quarter. Key stocks gaining institutional favor include: * **AU Small Finance Bank:** Held by **239** schemes; **104%** annual return. * **Ujjivan Small Finance Bank:** Held by **87** schemes; **99%** annual return. * **Shriram Finance:** Held by **396** schemes; **95%** annual return. * **Union Bank of India:** Held by **149** schemes; **76%** annual return. **Current Market Context** As of **February 19, 2026**, the broader market is navigating a phase of consolidation after a recent three-day winning streak. The Nifty 50 is trading near the **25,609** level, while the BSE Sensex holds around **82,946**. Despite short-term profit-taking in the IT sector, the financial and metal sectors continue to provide a floor for the indices. Mutual fund cash levels have remained stable at **4.8%** of AUM, indicating that fund managers are ready to deploy capital into market dips rather than retreating to safety. **Outlook for Investors** Flexi-cap funds emerged as the most popular category, attracting **₹7,672 crore** in a single month. This trend suggests a strategic shift toward flexible mandates that allow managers to rotate between large-cap stability and mid-cap growth as valuations evolve across different market segments.