Indian equity mutual fund inflows dropped sharply in May, reaching their lowest point in 13 months. This marked the fifth straight month of decline, with large-cap, mid-cap, and small-cap funds all seeing reduced investments.
According to data from the Association of Mutual Funds in India (AMFI), net inflows fell about 22% from April to 190.13 billion rupees ($2.22 billion), the lowest since April 2024. Large-cap fund inflows more than halved to 12.5 billion rupees, while mid-cap and small-cap funds saw declines of 15% and 20%, respectively.
The slowdown came amid a softer market in May after strong rallies in previous months. Factors such as stretched valuations, geopolitical tensions between India and Pakistan, and global inflation concerns contributed to investor caution, said Himanshu Srivastava, associate director at Morningstar Investment Research India.
Despite this, India’s Nifty 50 index rose 1.7% in May, marking its third consecutive month of gains. Foreign portfolio investors (FPIs) bought Indian shares worth $2.34 billion, the highest monthly inflow since September 2024. Small- and mid-cap indices surged 8.7% and 6.1%, helped by foreign buying and gains in defense stocks.
While overall equity inflows slowed, systematic investment plan (SIP) contributions hit a record high of 266.88 billion rupees in May. The number of SIP accounts rose to 85.6 million from 83.8 million in April, indicating growing retail investor participation and confidence in disciplined investing.
The mutual fund industry’s total assets under management (AUM) also reached a new high of 72.2 trillion rupees in May, supported by steady SIP inflows despite the equity inflow slowdown.
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