On 22 Oct 2026 the BSE Sensex closed at 73,452 points, up 2.8% from the start of the quarter, while the NSE Nifty 50 ended at 22,314, a 3.1% rise YoY. The rally is being powered by a combination of resilient consumption, a narrowing current‑account deficit and a gradual easing of RBI policy – the repo rate sits at 5.75%, down from 6.50% in early 2025.
Real GDP growth for Q3‑2026 was revised up to 7.4% YoY, and the fiscal deficit narrowed to 5.2% of GDP, giving investors confidence that earnings growth will stay robust across the board.
Across the 12‑month horizon (Oct 2025 – Oct 2026) the following categories have outperformed their benchmarks:
Below is a snapshot of the top‑performing schemes in each category as of 21 Oct 2026.
| Fund Category | Scheme Name | 1‑Year Return | 3‑Year CAGR | Expense Ratio |
|---|---|---|---|---|
| Large‑cap | Axis Long Term Equity Fund – Direct Plan | 14.8% | 13.2% | 1.12% |
| Flexi‑cap | Motilal Oswal Flexi‑Cap Fund – Direct Plan | 15.4% | 13.9% | 1.05% |
| Mid‑cap | HDFC Mid‑Cap Opportunities Fund – Direct Plan | 12.1% | 11.0% | 1.45% |
| Small‑cap | SBI Small‑Cap Fund – Direct Plan | 9.7% | 8.4% | 1.68% |
All four schemes are listed on AMFI and have assets under management (AUM) ranging from ₹8,000 crore to ₹22,000 crore.
Flexi‑cap funds have the latitude to shift between market‑cap segments and to overweight high‑growth sectors such as Technology, Consumer Durables and Renewable Energy. The Motilal Oswal Flexi‑Cap fund, for example, held 38% of its portfolio in the top 100 stocks, 42% in mid‑cap, and the remaining 20% in small‑cap, allowing it to capture upside from the ongoing IT services export boom and the green‑energy push.
Foreign Institutional Investors (FIIs) have been net buyers of Indian equities for the 10th consecutive month, accumulating ₹1.85 trillion in the last quarter alone. Domestic Institutional Investors (DIIs) turned net sellers in August 2026, offloading ₹560 billion, but have resumed buying from September onward, adding ₹340 billion.
Sector‑wise FII inflows were strongest in:
Conversely, DII outflows concentrated in Financial Services (₹210 billion) and Real Estate (₹140 billion), reflecting a short‑term rotation toward non‑cyclical themes.
The latest rotation matrix, compiled from fund disclosures and brokerage data, shows a clear shift from traditional banking to technology and green energy.
| Sector | Q3‑2026 Weight in Flexi‑Cap | Q3‑2025 Weight | Δ % Points |
|---|---|---|---|
| Information Technology | 22.5% | 16.8% | +5.7 |
| Pharma & Healthcare | 14.2% | 11.5% | +2.7 |
| Renewable Energy | 9.1% | 6.3% | +2.8 |
| Financial Services | 18.3% | 22.0% | -3.7 |
| Consumer Discretionary | 15.6% | 13.9% | +1.7 |
Technology’s rise is anchored by a 27% YoY earnings surge in the top ten IT exporters, while renewable energy benefited from the new “India Green Act” that offers a 25% tax credit on solar‑capex.
Leading market strategists at Motilal Oswal and ICICI Prudential project a continued Nifty rally to breach the 23,000 mark by March 2027, assuming the RBI holds rates steady and fiscal consolidation stays on track.
Key risks include:
Nevertheless, the consensus view is that large‑cap and flexi‑cap funds will retain their outperformance edge, while mid‑cap funds could close the gap if the credit environment improves.
Given the data above, here are practical steps you can take right now:
For a holistic view of fund performance, you can compare schemes side‑by‑side on Invest.PriceQ.in.
This mix balances growth (flexi‑cap, large‑cap) with moderate risk (mid‑cap, ELSS) and capital preservation (debt hybrid, cash).
No. Flexi‑cap funds are excellent for capturing sector rotation, but a diversified core of large‑cap and a modest mid‑cap slice still provides stability and dividend yield.
Quarterly reviews are advisable, especially after major macro events (rate changes, budget announcements, FII flow shifts). Rebalance only when allocations deviate by more than 2‑3% from your target.
Yes. The 15% tax deduction under Section 80C combined with a 12‑13% annualized return for top ELSS schemes makes them one of the most efficient wealth‑creation tools for Indian retail investors.
Investors are reminded that mutual fund investments are subject to market risks. Past performance does not guarantee future returns. Please read scheme-related documents carefully before investing.