Inflows into Indian equity mutual funds declined by 14 per cent in October, falling to ₹32,994 crore from ₹38,307 crore in September, according to data released by the Association of Mutual Funds in India. The Hindu BusinessLine reported that this slowdown was driven by intense market volatility, which caused mark-to-market losses that discouraged investors from maintaining their systematic investment plans. ThePrint noted that the sector attracted a net 330 billion rupees, a figure that reflects a broader shift in investor sentiment toward caution.
The shift in capital allocation was most pronounced in smaller companies. The Hindu BusinessLine observed that inflows into small and mid-cap funds lost momentum, with small-cap funds recording ₹4,980 crore and mid-cap funds ₹6,407 crore. In contrast, large-cap funds attracted significantly higher inflows of ₹8,484 crore. ThePrint highlighted that small-cap funds saw their inflows drop from a record 90.4 billion rupees in September to 64.1 billion rupees in October, while mid-cap inflows fell to 48.9 billion rupees. This trend indicated that investors were moderating their exposure to riskier segments of the market while remaining invested in equities.
Market conditions played a critical role in this reallocation. ThePrint reported that the NSE Nifty 50 Index had fallen to its lowest level since April 2025 early in the month, exacerbated by rising energy prices due to the Middle East conflict. Although the index recovered to end October 2 per cent higher, the broader market remained under pressure, with the Nifty Smallcap 250 dropping 5.8 per cent. Venkat Chalasani, Chief Executive of AMFI, stated that despite the volatility, SIP contributions remained above ₹32,000 crore, reflecting continued confidence in equity investments.
Debt funds experienced a reversal in flows, attracting ₹1.13 lakh crore in October after seeing outflows of ₹1.83 lakh crore in September, according to The Hindu BusinessLine. Nitin Agrawal, Chief Executive Officer of Mutual Funds at InCred Money, described the current situation as a stabilisation rather than a rebound. He noted that the direction of travel has changed, with the market erasing recent mark-to-market losses following a drop in crude oil prices and positive outlooks from global institutions. The overall assets under management for the industry increased marginally to ₹83.39 lakh crore.