Indian mutual funds nudged cash holdings to ~₹1.99 lakh crore in September, signalling a marginal risk-off posture even as total industry AUM set records. On a percentage basis, cash as a share of assets eased slightly, reflecting market gains and equity deployment. Portfolio managers cite elevated valuations in pockets of mid/small-caps and global policy uncertainty as reasons to keep dry powder. The stance offers flexibility ahead of heavy earnings flow, potential policy surprises and year-end liquidity dynamics that could shift sector leadership in the near term.