India equity fund inflows fall in July as large-caps see first outflows in over 2-1/2 years
Equity mutual fund inflows in India fell 14.8% month-on-month to 246.97 billion rupees ($2.59 billion) in July as large-cap funds saw outflows for the first time since December 2023, while investors poured record amounts into small-caps. Equity funds, however, registered net inflows for a record 65th consecutive month, data from the Association of Mutual Funds in India showed on Tuesday,…
In July, equity mutual fund inflows in India declined by 14.8% month-over-month to 246.97 billion rupees ($2.59 billion), as large-cap funds experienced their first outflows since December 2023. Small-cap funds, however, saw a surge in inflows, reaching a record high of 77.68 billion rupees in the same month. Equity funds overall continued to register net inflows for the 65th consecutive month, according to data from the Association of Mutual Funds in India.
Large-cap funds saw outflows of 13.22 billion rupees, compared to inflows of 20.67 billion rupees in June. Venkat Chalasani, CEO of AMFI, explained that the return of foreign buying from Foreign Portfolio Investors (FPIs) may have led domestic investors to book profits in large-cap segments.
Foreign investors purchased a net $2.12 billion of Indian equities in July, marking a reversal of four consecutive months of outflows. Small-cap fund inflows jumped 39% to an all-time high, while mid-cap inflows rose by 1.7%. Himanshu Srivastava, principal at Morningstar Investment Research India, noted that the willingness to deploy new capital into small- and mid-cap categories reflects investors' comfort with taking calculated exposure to higher-growth segments.
Systematic investment plans (SIPs), favored by retail investors, saw a 0.6% increase in contributions to 319.61 billion rupees, just short of the March record of 320.87 billion rupees. Since their lows in March and April, small-caps and mid-caps have risen 32.6% and 22.6%, respectively, outpacing the 10.3% rise in the Nifty. Debt-oriented schemes attracted 1.88 trillion rupees ($19.7 billion) in July, marking their first inflow in three months.
Umesh Sharma, CIO of debt at The Wealth Company Mutual Fund, expressed optimism about the near-term outlook for short-duration categories, attributing the positive sentiment to institutional capital redeployment, softer yields supported by strong dollar inflows, and reduced domestic debt supply.
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