Nifty 500 Fell 6%.
Large-Cap Funds Lost Half Their Gains.
The Nifty 500 fell 5.9% in September and 271 of 274 diversified funds lost money. Large-cap funds gave back half of what they had gained since March. Small-cap funds kept 88% of their gains.
Every index fell. Microcaps fell least.
The Nifty 500 closed September at 22,072.1, down 5.9%. It is 8.4% below its January peak and has given back half of the rally since March.
| Segmentlarge to small | Sep (1M) | Rolling 3M | Rolling 6M | 12M |
|---|---|---|---|---|
| Nifty 50 (large) | −6.1% | −5.2% | +1.3% | −8.1% |
| Nifty 100 | −5.9% | −4.7% | +3.8% | −6.2% |
| Nifty 500 | −5.9% | −4.0% | +7.5% | −2.9% |
| Midcap 150 | −7.1% | −4.0% | +12.5% | +3.9% |
| Smallcap 250 | −3.1% | +0.4% | +24.6% | +6.6% |
| Microcap 250 | −1.1% | +4.4% | +38.9% | +14.7% |
Midcaps fell hardest. Microcaps barely fell. This was not a flight to safety. Money did not move from small companies to large ones. It left large and mid companies and stayed in small ones.
Two in three funds beat the index. Almost none made money. Only three of 274 finished the month positive, all of them small-cap funds.
The fall has continued since. The Nifty 500 closed at 21,427.6 on 23/10/2026, another 2.9% lower.
The funds that rallied least gave back the most.
From March to August, small-cap funds rose the most and large-cap funds the least. In September the order held on the way down. The funds that had gained least gave back the most.
| Category | Rally, Mar to Aug | September | Given back▼ |
|---|---|---|---|
| Large Cap | +12.7% | −5.8% | 52% |
| Contra | +14.6% | −6.0% | 47% |
| Value | +13.8% | −5.1% | 43% |
| Large & Mid | +18.8% | −6.1% | 39% |
| Focused | +18.7% | −5.8% | 38% |
| Flexi Cap | +18.4% | −5.2% | 34% |
| Mid Cap | +22.4% | −6.4% | 33% |
| Multi Cap | +23.3% | −4.9% | 25% |
| Small Cap | +32.2% | −2.5% | 12% |
| All funds | +20.2% | −5.3% | 33% |
Median fund in each category. Given back is the September loss as a share of the March to August gain.
Large-cap funds gained 12.7% in the rally and lost half of it in one month. Small-cap funds gained 32.2% and kept 88% of it. Every small-cap fund beat the index in September. Only a third of mid-cap funds did.
Owning bigger, steadier companies did not soften the fall. It only meant there was less to lose.
Quant Large Cap went from 3 to 94. Three Invesco funds fell fifty places.
Each fund’s rank within its category over three months, last issue against this one. A rank of 94 means the fund beat 94% of its category.
| Biggest movesby size of move | Category | Rank last issue | Rank now | Move |
|---|---|---|---|---|
| Quant Large Cap | Large Cap | 3 | 94 | +91 |
| Bandhan Focused | Focused | 11 | 89 | +78 |
| Quant Large & Mid Cap | Large & Mid | 3 | 70 | +67 |
| LIC MF Large & Midcap | Large & Mid | 72 | 15 | −57 |
| Invesco India Flexi Cap | Flexi Cap | 89 | 34 | −55 |
| Invesco India Smallcap | Small Cap | 74 | 23 | −51 |
| Invesco India Midcap | Mid Cap | 91 | 41 | −50 |
Quant Large Cap ranked 97 in July, 3 in August and 94 in September. The fund did not change three times. The market did. Three month rankings are a snapshot, not a track record.
The fallers are a house story. Three Invesco funds, in three different categories, fell about fifty places together.
In a down quarter, the top tables are full of losers.
Ranked on the three months to September. Only one large-cap fund made money over the quarter. The second best lost 0.7%.
| Multicap mandate (Flexi, Multi, Large & Mid) | 3M▼ | Rank last issue | 1M | 1Y |
|---|---|---|---|---|
| Motilal Oswal Multi Cap | +10.9% | 1 | −3.5% | +12.8% |
| Taurus Flexi Cap | +7.9% | 16 | −0.7% | +8.9% |
| Motilal Oswal Flexi Cap | +5.1% | 2 | −5.5% | +3.6% |
| Groww Multicap | +4.1% | 9 | −3.4% | +18.6% |
| 360 ONE Flexicap | +3.6% | 20 | −2.2% | +10.1% |
| Large Cap | 3M▼ | Rank last issue | 1M | 1Y |
|---|---|---|---|---|
| Taurus Large Cap | +7.7% | 1 | −1.9% | +7.5% |
| ITI Large Cap | −0.7% | 17 | −2.4% | −0.1% |
| Quant Large Cap | −1.5% | 34 | −2.9% | +4.9% |
| Bank of India Large Cap | −1.8% | 24 | −3.8% | +3.8% |
| Bajaj Finserv Large Cap | −1.9% | 10 | −5.9% | 0.0% |
| Mid Cap | 3M▼ | Rank last issue | 1M | 1Y |
|---|---|---|---|---|
| Taurus Mid Cap | +8.2% | 3 | −2.4% | +6.3% |
| Motilal Oswal Midcap | +5.4% | 1 | −7.4% | +1.0% |
| TRUSTMF Mid Cap | +0.8% | 2 | −6.2% | n/a |
| Bandhan Mid Cap | +0.6% | 5 | −5.4% | +9.6% |
| Bank of India Mid Cap | +0.1% | 23 | −4.3% | +5.1% |
| Small Cap | 3M▼ | Rank last issue | 1M | 1Y |
|---|---|---|---|---|
| Samco Small Cap | +18.2% | 11 | +6.2% | n/a |
| Groww Small Cap | +10.2% | 1 | −0.5% | n/a |
| Bank of India Small Cap | +8.5% | 4 | +0.4% | +30.9% |
| TRUSTMF Small Cap | +5.4% | 7 | −2.0% | +32.5% |
| DSP Small Cap | +5.3% | 8 | −2.2% | +20.3% |
Rank last issue is the fund’s position in last month’s table. Samco Small Cap launched in December 2025, manages ₹270 crore and holds 17.7% in cash. Groww Small Cap and TRUSTMF Mid Cap launched in 2026. None of the three has a one year record.
Taurus leads the large-cap and mid-cap tables and is second among multicaps. Motilal Oswal Multi Cap has led its table for three issues running.
Best: Samco Small Cap, +6.2%. Worst: Franklin India Focused Equity, −8.1%. 271 of 274 funds lost money.
These tables are a record of what happened, not a list of what to buy.
Funds have been leaving IT since July.
In July funds bought a net ₹897 crore of IT stocks. In August they sold ₹3,389 crore. In September they sold ₹2,515 crore more. Infosys was the biggest trim for the third month running.
| Biggest additions to existing positions | Bought▼ |
|---|---|
| HDFC Bank | +₹2,282 Cr |
| DLF | +₹2,132 Cr |
| Kotak Mahindra Bank | +₹1,945 Cr |
| Gland Pharma | +₹1,576 Cr |
| Bajaj Finance | +₹1,523 Cr |
| Biggest trims | Sold▼ |
|---|---|
| Infosys | −₹1,325 Cr |
| State Bank of India | −₹1,287 Cr |
| Axis Bank | −₹747 Cr |
| Eternal | −₹744 Cr |
| Maruti Suzuki | −₹723 Cr |
Change in shares held across diversified funds, valued at the end-September price.
Bank trades went both ways: HDFC Bank and Kotak bought, SBI and Axis sold. LIC, August’s big purchase, was trimmed by 6%. Cash rose as the market fell. The median fund now holds 3.3%, up from 2.7%.
The year so far. September closes the third quarter. Here is how the book has shifted since January.
| Sector | Jan | Sep | Shift▼ |
|---|---|---|---|
| Pharmaceuticals & Biotechnology | 5.97% | 7.11% | +1.14 |
| Retailing | 4.17% | 5.28% | +1.11 |
| Electrical Equipment | 2.21% | 3.07% | +0.87 |
| Auto Components | 4.23% | 5.00% | +0.77 |
| Petroleum Products | 2.93% | 2.06% | −0.87 |
| Banks | 19.24% | 17.30% | −1.93 |
| IT – Software | 6.83% | 4.51% | −2.32 |
Share of all equity held by diversified funds.
IT has lost a third of its weight this year. Banks are down two points. Pharma and retailing took most of what they gave up.
NSE took 43% of the money that went into new names.
Funds opened positions in 28 companies in September, worth ₹4,697 crore. NSE alone took ₹2,006 crore across 61 funds. The next largest new position is a fifth of that size.
| Company | Position▼ | Funds | Since 30/09 |
|---|---|---|---|
| National Stock Exchange of IndiaTrades on BSE only | ₹2,006 Cr | 61 | −5.4% |
| Rentomojo | ₹400 Cr | 16 | +4.4% |
| Kanohar Electricals | ₹375 Cr | 11 | +3.6% |
| Hero Motors | ₹365 Cr | 11 | −27.4% |
| Axiscades Technologies | ₹280 Cr | 3 | −14.1% |
| Elevate Campuses | ₹266 Cr | 8 | −12.0% |
Six largest of 28 new names. Price change from 30/09/2026 to 23/10/2026.
Most of the new names have fallen since month-end. Hero Motors has lost a quarter. Exits were small: 10 names and ₹291 crore in all.
Small caps beat every theme.
A theme fund is a bet on one sector. Over the six months since the March low, no sector bet beat plain small-cap funds. Small-cap funds returned a median 29.3%. The best theme returned 22.9%.
| Theme | 1M | 3M | 6M▼ | 12M |
|---|---|---|---|---|
| Auto & Transport | −5.7% | +6.2% | +22.9% | +7.1% |
| Pharma & Healthcare | −3.6% | +3.3% | +21.7% | +19.0% |
| Manufacturing | −3.8% | +0.5% | +21.4% | +11.3% |
| Infrastructure | −2.6% | −3.9% | +15.5% | +6.0% |
| Consumption & FMCG | −5.7% | −1.7% | +11.4% | −6.3% |
| Banks & Financials | −6.7% | −4.6% | +10.2% | +2.1% |
| Energy & Power | −3.4% | −3.8% | +8.0% | +4.5% |
| Technology | −7.5% | +4.8% | +7.9% | −8.2% |
Median fund return per theme, ranked on 6M.
Auto and transport took the lead from pharma. Technology sits last over one month, six months and twelve months.
Franklin India Technology holds 22.5% of the fund in Bharti Airtel. ICICI Prudential FMCG holds over a third in two stocks, ITC and Hindustan Unilever.
US funds were the only thing that rose.
US and AI funds made a median 3.4% in September. Every other region, and every Indian category, lost money.
| Region | 1M | 3M▼ | 6M | 12M |
|---|---|---|---|---|
| China / Hong Kong | −2.0% | +2.4% | +13.4% | +20.0% |
| US / Nasdaq / AI | +3.4% | +2.0% | +33.3% | +33.7% |
| Global / Diversified | −2.4% | +1.7% | +15.3% | +21.7% |
| Emerging / Asia | 0.0% | −1.8% | +20.3% | +29.9% |
Median fund return per region, overseas fund-of-funds. Gold, commodity, bond and real estate funds excluded.
The gap in technology was the widest. Indian technology funds lost 7.5%. US technology funds gained 3.4%.
Bank of India Small Cap: it held while the market fell.
The Nifty 500 lost 5.9% in September. This fund gained 0.4%. It manages ₹3,671 crore across 85 stocks.
Its longer record is weak. In the 2024 to 2025 fall it lost 24.5% against the index’s 18.0%. In the rally from September 2025 to January 2026 it gained 1.2% while the index gained 7.3%. This year is different.
| 2026 so faroldest first | Nifty 500 | Fund | Edge |
|---|---|---|---|
| Fall (02/01 → 30/03) | −14.8% | −10.4% | +4.4 |
| Rally (30/03 → 30/06) | +12.0% | +34.7% | +22.7 |
| July 2026 | +2.0% | +1.9% | −0.1 |
| August 2026 | −0.0% | +6.0% | +6.1 |
| September 2026 | −5.9% | +0.4% | +6.3 |
Month-end to month-end. 02/01/2026 is the Nifty 500’s peak. Edge is the fund’s return minus the index’s, in points.
It fell less than the market from January to March, then gained nearly three times as much in the rally. Since the January peak it is up 30.9%. The Nifty 500 is down 8.4%.
Cash moved with the market. The fund raised cash into the fall, spent it near the March low, and has been raising it again since June.
| Cash, share of fund | Dec 25 | Feb 26 | Mar 26 | Sep 26 |
|---|---|---|---|---|
| Bank of India Small Cap | 1.5% | 10.8% | 2.8% | 8.7% |
| Median small-cap fund | 3.4% | 4.9% | 4.8% | 5.3% |
At 8.7%, it now holds more cash than nearly three in four small-cap funds.
HSBC Small Cap, featured last month, fell 3.3% in September. The median small-cap fund fell 2.5%.
Three things to carry into October.
September was the first real fall since March. It answered one question and left three open.
The size order held in both directions. Small caps led the rally from March and fell least in September. Large caps did the opposite. The order broke only once, in July, and for one month. The next issue will show whether a second month of falls breaks it again.
Funds are still leaving IT. Three months of net selling and a third of the sector’s weight gone this year. Infosys has been trimmed in each of the three months. There is no sign yet of the selling slowing.
Cash is rising. The median fund went from 2.7% to 3.3% in a month, and the fund under the lens holds 8.7%. Rising cash in a falling market is a choice, not an accident. Whether it gets spent, and when, is the thing to watch.
Since month-end the Nifty 500 has fallen another 2.9%, to 21,427.6 on 23/10/2026. October’s data will show whether the small-cap cushion survived a second month.
