Net equity inflows stood at ₹40,366 crore in March, up 55.5% from ₹25,965 crore in February.
According to Himanshu Srivastava, Principal Research at Morningstar Investment Research India, the uptick was supported by sustained SIP contributions, year-end portfolio allocations, and investors deploying fresh capital into equities amid market corrections.
Srivastava noted that the correction during the month was largely viewed as an accumulation opportunity rather than a trigger for risk aversion.
Total mutual fund AUM fell to ₹73.73 lakh crore in March from ₹82.03 lakh crore in February, a decline of about 10.1%, weighed down by market volatility and a broad-based correction in equities.
Within equity categories, exchange-traded funds (ETFs) recorded strong inflows of ₹19,802 crore in March compared with ₹4,487 crore in February. Gold ETFs saw inflows of ₹2,266 crore versus ₹5,255 crore in the previous month.
Sectoral and thematic funds reported inflows of ₹2,699 crore, slightly lower than ₹2,987.3 crore in February, while dividend yield funds posted inflows of ₹59.2 crore compared with ₹21.2 crore earlier.
Srivastava added that Indian equity markets witnessed notable volatility during the month amid geopolitical tensions, including the escalation of conflict in the West Asia involving the US, Israel, and Iran. He said this volatility created attractive entry points for long-term investors, contributing to the rise in equity allocations through mutual funds.
On the debt and hybrid side, liquid funds saw outflows of ₹1.34 lakh crore in March against inflows of ₹59,077.4 crore in February.
Corporate bond funds recorded outflows of ₹15,292.6 crore, compared with ₹2,302 crore in the previous month. Credit risk funds also saw outflows of ₹329.66 crore versus ₹94.2 crore in February, while ELSS funds recorded outflows of ₹437.3 crore compared with ₹650 crore in the previous month.
Market participants noted that the decline in AUM was largely linked to weaker market performance during March, rather than redemption pressure. Separately, liquid fund outflows were attributed to year-end rebalancing activities.