Mutual Funds Lead Buying as EPFO Credits FY26 Interest

Mutual Funds (MFs) in India sustained their buying momentum in June 2026, favoring stocks in the financial, IT, and FMCG sectors, even as Foreign Institutional Investors (FIIs) persisted with a net selling strategy. The market landscape is undergoing a significant shift with the upcoming MSCI India index rejig, which is projected to incorporate up to 12 new stocks. This restructuring is expected to attract approximately $2.3 billion in passive inflows, potentially providing a liquidity cushion to the broader Indian equity markets amidst fluctuating foreign sentiment.

In a landmark administrative development, the Employees' Provident Fund Organisation (EPFO) has successfully credited interest for the financial year 2025-26 (FY26) to 35 crore accounts. This achievement marks the first time such a massive disbursement has been processed in a single transaction. The move signals a significant improvement in the EPFO’s digital infrastructure and operational efficiency, providing millions of subscribers with immediate transparency and access to their accrued retirement savings, thereby bolstering consumer confidence in the long-term pension scheme.

The disparity between domestic mutual fund buying and foreign selling highlights the resilience of Indian retail-driven capital. With the influx of passive funds following the index rejig and the stabilization of EPFO interest credits, market analysts expect improved liquidity levels. Investors are closely monitoring how the inclusion of new stocks will rebalance indices and whether the domestic buying surge can offset ongoing FII outflows. The combination of structural institutional reforms and persistent domestic inflows remains a defining feature of the current Indian bull market landscape.