Indian equity mutual fund inflows hit 5-month high

Indian equity mutual funds recorded a five-month high in inflows in September, attracting ₹383.07 billion ($4 billion) as domestic investors continued to invest despite a market sell-off and sustained foreign outflows. Equity funds have now recorded net inflows for 67 consecutive months, highlighting the growing role of domestic investments in supporting Indian equities amid global market volatility.

Mid-cap and small-cap funds attracted record inflows of ₹78.45 billion and ₹90.39 billion, respectively, while systematic investment plan (SIP) contributions rose 0.6% to a record ₹324.90 billion ($3.39 billion). These steady domestic investments helped offset $3.75 billion in foreign portfolio outflows during September.

According to AMFI chief executive Venkat Chalasani, consistent domestic flows, particularly through SIPs, reflect strong support from retail investors and domestic institutions despite inflationary pressures, rising crude oil prices and higher U.S. bond yields.

Although the Nifty 50 fell 6.1% in September and is down approximately 14.4% so far in 2026, domestic mutual fund investments have helped cushion the broader market. The small-cap index has gained 9.6% this year, while the mid-cap index has declined by a relatively modest 2.7%.

Market experts believe the sustained growth in SIP investments represents a structural shift in India's investment landscape. An expert said continued domestic institutional support could pave the way for a structural bull run when foreign institutional investors return to the market.

Meanwhile, investors continued to increase their exposure to precious metals. Gold ETF inflows surged 71% to ₹44.51 billion in September, while silver ETFs attracted ₹19.74 billion, reflecting continued interest in alternative investment options amid market uncertainty.