“These rebound signals are improving investor sentiment, aided by broad-based equity market gains. While the Nifty50 performed well, it was the stronger rallies in the mid- and small-cap segments that reignited interest,” said Himanshu Srivastava, associate director-manager research, Morningstar Investment Research India.
Investor activity was widespread, with flexi-cap, mid-cap, and small-cap funds seeing robust inflows. According to Srivastava, recent market corrections created attractive entry points, prompting portfolio reallocations. “SIP flows have remained steady, showcasing the growing discipline among retail investors. June could be a turning point, with signs of a rising risk appetite and continued faith in Indian equities,” he added.
Meanwhile, assets in the mutual fund industry touched a new high. “We’re nearing the ₹75 lakh crore milestone, with June AUM at ₹74.5 lakh crore,” said Anand Vardarajan, chief business officer, Tata Asset Management.
On the debt side, open-ended fixed-income funds experienced net outflows worth ₹1,711 crore in June, marking a sharp improvement from the ₹15,908 crore recorded in May. “The pressure was mainly due to redemptions in institutional-heavy categories like overnight and liquid funds, driven by quarter-end treasury needs. Together, these categories saw ₹33,350 crore in outflows,” said Nehal Meshram, senior research analyst, Morningstar India.
Yet, other fixed-income segments recorded strong inflows. Short-duration funds led the pack with ₹10,276 crore in June, followed by money market funds at ₹9,484 crore and corporate bond funds at ₹7,124 crore. These inflows reflect a tilt towards lower-duration, yield-focused strategies amid interest rate uncertainty.
Gilt and long-duration funds, however, saw minor outflows of ₹957 crore and ₹445 crore, respectively. Meshram noted that, despite expectations of a rate cut, investors remained cautious about long-duration strategies. “With much of the policy easing already priced in and the timeline still unclear, the caution is understandable,” she said.
Overall, fixed-income funds have added ₹1.21 lakh crore in net inflows in the first half of FY2025, signalling a potential shift in investor interest.