ICICI Bank Overtakes HDFC Bank As Top Mutual Fund Holding In July

ICICI Bank has emerged as the most valuable stock holding in mutual fund portfolios in July, ending HDFC Bank's three-year run at the top of the list. Mutual funds currently hold around 3.94 billion shares of HDFC Bank valued at ₹2.96 lakh crore, while their holding in ICICI Bank stands at approximately 2.10 billion shares worth ₹3.01 lakh crore.

ICICI Bank now accounts for 5.35% of equity mutual fund holdings, compared with 5.24% for HDFC Bank, with 552 schemes holding ICICI Bank shares as of July against 514 schemes holding HDFC Bank.

Governance Concerns Weigh On HDFC Bank

According to analysts, the shift is not simply a case of institutional investors exiting HDFC Bank but reflects lingering concerns over executive leadership succession and governance at the country's largest private sector lender.

Some concerns remain even after the bank’s internal review conducted by an independent agency, experts said, adding that HDFC Bank has faced some governance-related concerns following the resignation of its chairman and a recent fine imposed on its CEO. HDFC Bank was the top mutual fund holding since July 2023, and the value of funds’ holding in the bank had touched a record high of over ₹3.39 lakh crore in November 2025.

Contrasting Stock Performance

The shift reflects the diverging performance of the two lenders. HDFC Bank fell 6.2% in July and is down 25% so far in 2026 amid concerns over profitability pressures, governance and succession, which have triggered record selling by foreign investors.

The bank's leadership said last month that its board is evaluating the reappointment of incumbent CEO Sashidhar Jagdishan, whose second term is due to end in October. ICICI Bank, meanwhile, has had a steadier run, with its stock gaining 4.4% in July and 7% so far this year. ICICI Bank reported a steady set of results, with no such governance concerns. The two-year extension of its MD and CEO's tenure has also provided greater clarity on management continuity, analysts said.

Mutual Fund Holdings Increase For Both Lenders

Despite the change in rankings, mutual funds have ratcheted up their holdings in both banks. Combined, they now have about a 30.04% stake in HDFC Bank, up from 26.7% at the end of December 2025. Holdings in ICICI Bank have risen to about 29.6% from 26.09% during the same period, despite a fall in overseas fund ownership.

Reliance Industries remains the third most valued mutual fund holding at around ₹1.75 lakh crore, followed by Bharti Airtel and Axis Bank at approximately ₹1.47 lakh crore and ₹1.3 lakh crore respectively.

Valuation Gap Narrows Despite Market Cap Lead

HDFC Bank remains the larger lender by market capitalisation at ₹11.21 lakh crore, compared with ₹10.18 lakh crore for ICICI Bank, though the gap has narrowed considerably this year. HDFC Bank is trading at an estimated price-to-book multiple of 1.78 times against ICICI Bank’s 2.43 times.

Both stocks are trading below their respective five-year average multiples. Analysts said that while HDFC Bank's stock has been weighed down, ICICI Bank’s better overall performance has helped it to remain steady.

Analysts expect that the gap between the two stocks will persist for some time. ICICI Bank leads the race with 52 buy ratings and no hold or sell ratings, compared with 47 buy ratings and one hold for HDFC Bank, according to analyst ratings.

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