Equity mutual fund inflows in India declined by nearly 14 per cent in October to ₹32,994 crore, down from ₹38,306 crore in September, as persistent market volatility prompted investors to pare back exposure to high-risk segments in favour of more balanced strategies. Leading this defensive shift were large and mid-cap funds, which emerged as the top-performing equity sub-category by attracting ₹8,484.23 crore—nearly double the ₹4,271.22 crore recorded in the previous month. According to InCred Money Mutual Funds CEO Nitin Agrawal, following September’s market correction that significantly impacted pure mid-cap portfolios, investors began moderating risk at the margin by channelling fresh capital into the steadier large and mid-cap proposition. Simultaneously, contra funds experienced a remarkable resurgence, drawing ₹1,694 crore in October compared to just ₹98 crore in September, which Morningstar Investment Research India principal manager research Himanshu Srivastava noted reflects renewed appetite for undervalued, out-of-favour market segments. Despite the pullback in broader equity allocations, the overall Indian mutual fund industry staged a massive turnaround, posting total net inflows of ₹1.74 lakh crore in October and decisively reversing September’s ₹1.33 lakh crore net outflows. This dramatic recovery was propelled overwhelmingly by debt mutual funds, which recorded net inflows of ₹1,13,437.89 crore after suffering heavy outflows of ₹1,83,155.76 crore in September. Morningstar senior analyst Nehal Meshram attributed this rebound to liquidity-oriented categories, signaling a routine reversal of quarter-end treasury adjustments as corporations and institutions redeployed surplus cash into short-term debt instruments. Meanwhile, retail participation through systematic investment plans (SIPs) witnessed a slight moderation, with monthly contributions easing marginally to ₹32,160 crore from ₹32,490 crore in September, alongside a minor dip in contributing SIP accounts from 10.06 crore to 10 crore. Addressing these trends, Association of Mutual Funds in India (Amfi) chief executive Venkat Chalasani acknowledged that short-term market turbulence likely influenced investor sentiment, yet emphasized that India’s foundational macroeconomic drivers remain firmly supportive. Specifically, Chalasani highlighted the recent re-rating of Indian equities by foreign brokerages, declining global crude oil prices, resilient corporate earnings, and robust bank credit growth as compelling indicators of underlying domestic economic strength. Beyond traditional equity and debt instruments, investor diversification remained evident in the commodities space, where both gold and silver exchange-traded funds (ETFs) attracted inflows exceeding ₹3,000 crore each during the month, underscoring sustained demand for precious metals as portfolio hedges. Furthermore, primary market activity stayed healthy across the asset management sector, with 28 new fund offerings (NFOs) launched across various categories collectively mobilising ₹3,829 crore, according to official Amfi data, demonstrating that despite tactical shifts toward safety and liquidity, long-term confidence in India’s financial markets remains intact.
Investors Balance Risk in October: Equity Inflows Fall 14% While Debt and Precious Metal ETFs Surge
