Net inflows into equity mutual funds dropped sharply by 40.4% month-on-month in May 2026, reflecting a more cautious investor mood amid heightened market volatility, geopolitical tensions, inflation worries, and pressure on the rupee, according to the latest AMFI monthly data of May 2026.
According to AMFI data, net equity fund inflows fell to Rs 22,907.77 crore in May, the lowest level in 12 months, from Rs 38,440.20 crore in April, a decline of Rs 15,532 crore in just one month.
The sharp plunge has come after months of strong retail participation and suggests that investors turned more selective amid uncertainty in domestic and global markets.
During May, investors had to contend with concerns around rising geopolitical tensions in West Asia, volatility in crude oil prices, inflation risks, fluctuations in the rupee, and sharp swings in equity markets.
Flexi cap funds remain the largest contributor, but inflows nearly halve
Flexi-cap funds continued to attract the highest net inflows among equity categories, but even they witnessed a sharp slowdown.
Net inflows into flexi cap funds fell to Rs 5,175.54 crore in May from Rs 10,147.85 crore in April, a decline of nearly 49%.
Small-cap and mid-cap funds, which had been key beneficiaries of retail enthusiasm over the past year, also saw a moderation in inflows.
Small-cap and mid-cap categories lose momentum
Small-cap fund inflows declined from Rs 6,885.90 crore in April to Rs 4,945.57 crore in May, a fall of about 28%. Meanwhile, mid-cap fund inflows dropped from Rs 6,551.40 crore to Rs 4,385.06 crore, down nearly 33% month-on-month.
The moderation suggests that investors became more cautious toward relatively expensive market segments after a prolonged rally and amid concerns over stretched valuations.
Large-cap funds recorded net inflows of Rs 1,592.93 crore in May compared with Rs 2,524.61 crore in April, a decline of around 37%.
Focused funds saw inflows fall from Rs 1,194.80 crore to Rs 830.25 crore, while value/contra funds declined from Rs 1,478.08 crore to Rs 509.57 crore, indicating weaker risk appetite across diversified equity strategies.
Sectoral funds see the steepest fall among major categories
One of the sharpest declines was visible in sectoral and thematic funds.
Net inflows into sectoral/thematic schemes plunged from Rs 1,949.36 crore in April to Rs 647.87 crore in May, a drop of nearly 67%.
These funds are typically more sensitive to market sentiment and often witness large swings in investor flows depending on sector-specific opportunities and broader market conditions.
Multi-cap and large & mid-cap funds also see substantial moderation
Multi-cap fund inflows fell from Rs 3,806.01 crore in April to Rs 2,291.01 crore in May, down nearly 40%. Similarly, large & mid-cap fund inflows declined from Rs 4,490.49 crore to Rs 3,278.22 crore, a fall of about 27%.