In a significant boost to market sentiment, mutual funds (MFs) have stepped up their equity purchases, playing a key role in driving block deals and accelerating Initial Public Offering (IPO) activity. The surge in buying has not only signaled increasing confidence among domestic institutional investors but also provided the much-needed liquidity to fuel the primary and secondary markets.
Rising Mutual Fund Inflows in 2025
According to recent data from the Association of Mutual Funds in India (AMFI), equity mutual funds saw net inflows of over ₹25,000 crore in June 2025 — marking one of the highest in the last 12 months. The sharp uptick reflects robust investor confidence backed by stable macroeconomic fundamentals, strong earnings outlook, and increased retail participation through SIPs (Systematic Investment Plans).
SIPs alone contributed ₹18,500 crore in monthly inflows, continuing their consistent growth trajectory. This surge in assets under management (AUM) is empowering fund managers to take more aggressive positions in both primary (IPO) and secondary (block deals) markets.
Fueling Block Deals: A Strategic Shift
Block deals — large transactions executed between two institutional parties at a pre-negotiated price — are witnessing a revival, largely powered by MF buying. In the first half of FY26, block deal volumes have risen nearly 40% year-on-year, with mutual funds accounting for a major chunk of the buy-side activity.
Some of the top blue-chip and mid-cap companies saw their promoter holdings being offloaded through block deals, which mutual funds were quick to absorb. This trend is driven by multiple factors:
- Valuation comfort in select sectors like banking, FMCG, auto, and manufacturing
- Long-term investment horizon of mutual funds
- Opportunity to acquire large stakes in quality companies without market disruption
The aggressive stance by MFs is also helping private equity and strategic investors exit their investments smoothly, adding to market liquidity.
Mutual Funds Drive IPO Momentum
IPOs are another segment witnessing renewed enthusiasm from mutual funds. After a slow 2024, 2025 has started with a bang — nearly 25 companies have launched their IPOs in the first half of the year, raising more than ₹40,000 crore collectively.
Anchor investor data reveals that mutual funds are emerging as dominant players in IPO allocations. In several issues, they have subscribed to over 30% of the anchor book. Their participation is providing credibility to IPO valuations and encouraging retail and HNI investors to follow suit.
Notable IPOs where mutual funds took significant exposure include:
- Technoplus Robotics Ltd – ₹5,200 crore IPO; MFs took 35% of anchor portion
- Green Energy Infra – ₹3,800 crore IPO; 6 large fund houses participated as anchor investors
- FinEz Paytech Ltd – A ₹2,400 crore digital finance IPO where mutual funds collectively subscribed to ₹700 crore
With a robust pipeline of over 50 companies awaiting SEBI’s approval, mutual funds are expected to continue playing a vital role in IPO funding and market depth.
Sector-Wise Focus of Mutual Funds
Mutual funds are not only increasing volumes but also showing clear thematic preferences in 2025:
- Banking & Financial Services: With rate stabilization by the RBI, MFs are turning bullish on large private and PSU banks.
- Infrastructure & Capital Goods: Benefiting from the government’s continued capex push.
- Green Energy & EV: Clean energy, battery manufacturing, and EV component companies are attracting long-term MF bets.
- Digital Tech & Fintech: Selective investments are being made in scalable, profitable tech startups post-IPO.
Impact on Market Sentiment
The aggressive participation of mutual funds in both secondary and primary markets is providing stability amid global volatility. With Foreign Portfolio Investors (FPIs) showing mixed trends due to global macro concerns, the domestic MF industry is emerging as a strong counterbalancing force.
Retail investors are increasingly seeing mutual funds as a preferred vehicle for equity exposure, further expanding the industry’s influence. The confidence shown by MFs in IPOs and block deals sends a strong signal of market maturity and long-term bullishness.
Outlook Ahead
With India’s economic fundamentals remaining strong, and inflation moderating, the momentum in mutual fund investments is likely to sustain. Fund houses are expected to further diversify their portfolios and continue aiding capital market depth.
Upcoming IPOs in the manufacturing, digital tech, and consumer sectors will test investor appetite, but mutual fund involvement is expected to ensure strong subscription levels.
In conclusion, mutual funds have emerged as powerful market participants in 2025 — not just in the traditional stock buying space, but also in strategic block deals and IPOs. Their intensified buying spree is helping unlock promoter wealth, improve liquidity, and support India’s vibrant capital market ecosystem.
I am a digital marketing executive as well as content writer in the stock market and crypto related blogs. My goal is to provide simple, interesting and reliable information to readers through my articles so that they always stay updated with the world of stock market and crypto.
