Inflows into India's equity mutual funds saw a 14.2% decline in November, amounting to ₹359.43 billion ($4.24 billion), according to data released by the Association of Mutual Funds in India (AMFI) on Tuesday. Despite the drop from October’s record high, domestic investors continued their buying streak for the 45th consecutive month, the longest run on record, cushioning the impact of hefty foreign outflows.
The sustained inflows helped offset foreign outflows of ₹216.12 billion, aiding India's benchmark indices, including the NSE Nifty 50, BSE Sensex, and broader smallcap and midcap indices, to recover from a market correction earlier in the month. These indices had slipped over 10% from their September highs before staging a recovery in the last three weeks.
“Fund managers see value in the market after the recent drop, evidenced by mutual funds’ sustained buying during the correction,” said Nilesh Shah, Managing Director of Kotak Mahindra Asset Management Company.
Among equity-oriented funds, sectoral and thematic fund inflows declined by 37.6%, primarily due to fewer fund launches in November. In contrast, smallcap and midcap funds saw inflows rise by 9% and 4.3%, respectively, driven by selective opportunities in fundamentally strong companies, said Nikhil Rungta, Chief Investment Officer of Equity at LIC Mutual Fund. Largecap fund inflows, however, fell by 26.2%.
“We maintain cash reserves to strategically invest during market corrections, which offer attractive opportunities,” Rungta added.
In December, Aditya Birla Sun Life Mutual Fund introduced a new conglomerate fund aimed at investing in India’s top corporations, reflecting continued innovation in fund offerings.
Contributions to systematic investment plans (SIPs) fell slightly to ₹253.20 billion in November from ₹253.23 billion in October, breaking a 16-month streak of record highs. However, Venkat Chalasali, CEO of AMFI, dismissed concerns over the marginal dip, stating it does not indicate a weakening trend.
As Indian equity markets navigate volatile global conditions, the resilience of domestic investors and strategic fund deployment by mutual fund managers underscore a robust foundation for sustained growth in the sector.