Analysts say the turnaround largely reflects post-year-end cash redeployment, as corporate and institutional investors reinvested surplus balances temporarily drawn down in December.
Liquidity funds lead the recovery
The rebound was driven predominantly by liquidity-oriented categories. Overnight funds attracted ₹46,280 crore, while liquid funds drew ₹30,682 crore in inflows. Money market funds also gathered ₹12,763 crore, supported by attractive short-end yields and renewed parking demand.
Analysts attribute this pattern to a normalisation of treasury activity after year-end balance-sheet adjustments, taxes, and institutional cash flows.
Selective flows in other debt segments
Beyond the core liquidity buckets, low-duration funds recorded inflows of ₹4,779 crore.
However, not all segments participated in the recovery. Corporate bond funds faced outflows of ₹11,473 crore, likely due to institutional churn, profit-taking, and reallocations back to overnight or liquid funds.
Other segments also saw withdrawals, including dynamic bond funds (₹1,435 crore), gilt funds (₹1,428 crore), and long-duration funds (₹1,336 crore), highlighting continued caution on extending duration amid ongoing yield and policy uncertainties.
Nehal Meshram, Senior Analyst, Morningstar Investment Research India, said, “January’s debt fund inflows appear driven more by liquidity normalisation and reinvestment flows than by a decisive shift toward duration-led strategies. Investors are still anchoring allocations in liquid and low-volatility debt categories, reflecting a measured approach until policy and yield signals become clearer.”
First Published: Feb 10, 2026 12:27 PM IST