This stark divergence highlights growing polarization in large-cap positioning, raising both risks of sharp corrections in overcrowded stocks and opportunities for outperformance among underowned heavyweights if sentiment shifts.
Where the crowd is: Most overowned stocks
As per the latest mutual fund data analysed by Elara Securities, about 25% of all equity scheme inflows this year have flowed into just six stocks, signifying heavy consensus among fund managers:
Axis Bank, Maruti Suzuki, Eternal Ltd, State Bank of India, ICICI Bank, SBI Life Insurance are among the most overowned large caps. Axis Bank, for example, has a mutual fund holding 52% higher than its weight in the benchmark indices, a sign of strong institutional preference and crowding.
Maruti Suzuki and Eternal are similarly overweighted, reflecting a clear alignment among top mutual funds on their prospects.
This crowding effect is a double-edged sword: while consensus may be driven by earnings strength and visibility, it also means these stocks could face sharper outflows if sentiments reverse. Heavy mutual fund ownership sometimes leads to heightened volatility in corrections.Also Read | Just 19 stocks corner half of Rs 2.7 lakh crore mutual fund inflows in 2025
Most underowned stocks
On the flip side, several prominent stocks remain strikingly underowned by mutual funds, even as they dominate benchmark indices or broader market narratives:
Reliance Industries, the largest stock by market capitalization, is 26% underweight relative to its index weight in mutual fund portfolios. This suggests skepticism on near-term outperformance or concerns about valuation and sector allocation.
HDFC Bank, long considered a bellwether for smart money, is also underheld by 9% versus its index weight, despite maintaining high visibility and liquidity.
ITC and Tata Consultancy Services (TCS), both consumer and technology blue chips, stand out as major underweights. ITC, in particular, is 28% underowned, a possible reflection of sector rotation or ESG restraints.
Other prominent names in the underowned list include Hindustan Unilever, JSW Steel, Titan Company, Grasim Industries, Nestle India, Adani Ports, and Bajaj Finance.
The reasons for such widespread underownership among heavyweights range from earnings uncertainty, sectoral rotation (towards financials, autos, and pharma), regulatory risks, to simple valuation fatigue.
Also Read | Mukesh Ambani crashes quick commerce party. Can Reliance disrupt Blinkit, Swiggy, Zepto’s 10-minute game?
Trends across fund houses
Ownership bias varies not just at the stock level but also across asset managers. Leading MFs like HDFC, ICICI Prudential, and SBI Mutual Fund display consensus overweight positions in certain banks and autos, while underexposing themselves dramatically to heavyweights in FMCG, tech, and metals.
Underweights are particularly stark in energy and FMCG, as mutual funds chase tactical alpha outside of sectors that have underperformed or are viewed as crowded by global investors.
For investors, the stark positioning in large, popular stocks underscores the need to monitor not just fundamentals but also ownership trends and institutional flows. Overowned stocks can be vulnerable to sharp corrections during periods of market uncertainty, while underowned blue chips may offer mean-reversion opportunities if sentiment shifts.
In an increasingly polarized market, being aware of where the big money is congregating and where it is conspicuously absent can be as important as reading the balance sheet or the latest earnings report. The next leadership in the market may very well come from today’s underowned giants as institutional preferences reset in a volatile investment landscape.