Stock mutual funds offer up to 9% return in October. Is rally here to stay?

With the benchmark indices – Nifty50 and BSE Sensex – up as much as 5%, equity mutual funds offered nearly 9% gains in October, led by strong performances by sector and thematic funds that led the return charts.

In October, Nifty50 and BSE Sensex rose 4.90% and 4.95% respectively. In the mentioned period, there were 578 equity mutual funds, including sector and thematic funds and excluding equity-oriented hybrid funds.

Of these 578 funds, 568 reported positive returns and 10 reported negative returns in October. Further analysis showed that of these 10 funds, nine were international funds.

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Motilal Oswal Nasdaq 100 FOF, the topper in the list, offered a return of 9.02% in October, followed by two technology-based funds. WOC Digital Bharat Fund and HDFC Technology Fund posted returns of around 7.58% and 7.05% respectively during the same time period.

Motilal Oswal Business Cycle Fund and SBI Technology Opp Fund achieved returns of 6.97% and 6.97% respectively during the mentioned time period. 6.79%. Two funds from Mirae Asset Mutual Fund – Mirae Asset Global Electric & Autonomous Vehicles Equity Passive FOF and Mirae Asset Global Kotak Technology Fund, ICICI Pru Technology Fund, Edelweiss Technology Fund – offered returns of 6.54%, 6.52% and 6.42% respectively in October. Motilal Oswal Services Fund and Aditya Birla SL Digital India Fund each posted a return of 6.25% during the said time period. Sundaram Mid Cap Fund has returned 5.28% during the period from October 1 to October 30.

Both Bandhan Focused Fund and Axis US Specific Equity Passive FOF returned 5.18% each during the mentioned time period. Baroda BNP Paribas Banking and Fin Serv Fund and DSP Global Clean Energy Overseas Equity Omni FoF offered similar gains of around 5.10% in October.

Two funds from Aditya Birla Sun Life Mutual Fund – Aditya Birla SL Mfg. Two funds from the largest asset-based fund under management, SBI Mutual Fund, have delivered almost similar returns.

SBI Comma Fund and SBI Focused Fund offered a return of around 5.03% and 5% respectively in October. Two funds from Mirae Asset Mutual Fund – Mirae Asset Large & Midcap Fund and Mirae Asset ELSS Tax Saver Fund – returned 4.96% and 4.95% respectively in October.

SBI Contra Fund, the oldest and largest contra fund, returned 4.83% in the given time frame, followed by Motilal Oswal Small Cap Fund, which also offered 4.83% return in the given time frame.

Capitalmind Flexi Cap Fund, a relative newcomer to the mutual fund industry, returned 4.74% in October. Two funds from Axis Mutual Fund – Axis Value Fund and Axis Momentum Fund – returned 4.59% each in October.

The oldest ELSS fund, SBI ELSS Tax Saver Fund, posted a return of 4.38% in October. Quant Small Cap Fund, Quant Mutual Fund’s largest fund managed by assets under management, posted a gain of 3.60% over a similar horizon.

The largest active and asset-based flexi cap fund under management, Parag Parikh Flexi Cap Fund returned 3.36% between October 1 and October 30. Edelweiss Greater China Equity Off-shore Fund was the last in the link to offer positive returns in October as the fund gave 0.12%.

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Negative performers

ICICI Pru Strategic Metal and Energy Equity FoF lost the most in October, around 5.07%, followed by Mirae Asset Hang Seng TECH ETF FoF, which returned a negative 3.11% during the same period.

PGIM India Global Select Real Estate Securities FoF offered a negative return of 1.73% during the same time period. Two funds from ICICI Prudential Mutual Fund – ICICI Pru US Bluechip Equity Fund and ICICI Pru Global Stable Equity Fund (FOF) – lost 0.53% and 0.34% respectively during the same period.

Aditya Birla SL US Treasury Bond ETF 1-3 Year FoF and Bandhan US Treasury Bond 0-1 Year Specific Debt Passive FOF lost the lowest in October, around 0.16% and 0.15% respectively.

Considered universe

We considered all equity mutual funds including sector and thematic mutual funds. We consider regular and growth oriented funds. We calculated the performance of these funds for the month of October.

Note that the above exercise is not a recommendation. The exercise was conducted to see how equity mutual funds performed from October 1 to October 30.

One should not make investment or buyback decisions based on the above exercise. One should always make investment decisions based on risk appetite, investment horizon and goals.

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Will the rally stay?

ETMutualFunds spoke to an expert to understand what helped mutual funds achieve this performance in October and what strategy mutual fund investors should follow in the coming months.

According to the expert, after a muted performance in September 2025, equity funds made a strong comeback in October 2025, delivering a strong performance of around 4-5% across categories. As we entered October 2025, the earnings season got off to a positive start. The ongoing earnings season suggests steady earnings growth, with large-caps expected to post earnings growth of 6-7%, while broader market segments such as mid-caps and small-caps should deliver strong year-on-year growth of 14-16%.

“For full FY26, we expect the Nifty 50 to post 8% earnings growth followed by 16% and 10% for midcaps and smallcaps respectively. In addition, supportive macro factors are expected, including GDP growth of 7.8% in Q1FY26, inflation revised to 2.6% for FY26, recent RBI rate cuts, increases and further reductions in corporate consumption across the sector and further cuts in corporate earnings.” reinforcing the positive market sentiment heading into the year-end,” shared Shweta Rajani, Director, Mutual Funds, Anand Rathi Wealth Limited with ETMutualFunds.

While Shweta Rajani recommends that you stay diversified across categories, including market cap based funds, on a strategy like value, contra and focused, Shweta Rajani recommends following a 55:23:22 mix of market caps across large, mid and small to gain exposure across market caps, segments and categories, which helps maintain stability, liquidity and ride across market cycles.

(Disclaimer: Recommendations, suggestions, views and opinions of experts are their own. These do not represent the views of The Economic Times)

If you have any questions about mutual funds, message ET Mutual Funds on Facebook/Twitter. Our panel of experts will answer that. Share your questions at ETMFqueries@timesinternet.in along with your age, risk profile and Twitter description.