Mutual Funds Boost Smallcap Stakes in Q2 2026

Domestic mutual funds substantially increased their stake in several smallcap stocks during the June 2026 quarter, led by consistent Systematic Investment Plan (SIP) inflows.

This sustained buying activity positions domestic funds as crucial market anchors, providing reliable capital even amidst foreign investor withdrawals from the Indian equity market.

Smallcap Leaders in MF Inflows

• Pine Labs: Mutual fund holding surged from 8.88% to 21.25%.
• Acme Solar Holdings: Mutual fund holding tripled from 5.35% to 16.2%.
• Gujarat Energy: Mutual fund holding rose from 7.86% to 16.38%.
• Indraprastha Gas (IGL): Mutual fund holding climbed from 9.46% to 16.33%.
• Corona Remedies: Mutual fund holding nearly doubled from 6.35% to 12.5%.

Pine Labs achieved its first full year of profitability in six years. Its November 2025 listing suggests some increase reflects expiring lock-ins and index eligibility, with the stock trading over 100 times earnings amid stiff competition.

Acme Solar Holdings reported strong revenue and profit growth in FY26, actively expanding into battery storage. The company operates in a capital-intensive sector, with revenue tied to power purchase agreements and facing potential project delays.

Gujarat Energy transformed into an integrated energy group post-merger effective May 1, 2026, which contributed to the holding increase. Despite an EBITDA rise in FY26, profit after tax declined, and the stock’s performance has been weaker due to government policy changes affecting gas allocation and margins.

Indraprastha Gas (IGL) experienced revenue growth in FY26, though profit and EBITDA declined. This was a direct result of government policy cutting allocations of cheaper gas, forcing IGL to procure costlier alternatives while facing limits on consumer price increases.

Corona Remedies, an Ahmedabad-based branded generics pharmaceutical company listed in December 2025, posted strong FY26 results. Growth was driven by strategic acquisitions and a focus on chronic therapies, which typically provide stable revenue streams, though recent listing and acquisition strategies introduce integration risks in a competitive market.

Investment Implications

While sustained mutual fund buying generally signals a positive outlook, reflecting domestic fund managers’ relative judgment of businesses, investors must consider specific nuances.

Not all percentage-point changes convey the same underlying signal, requiring careful evaluation beyond raw numbers.