Inflows into India’s equity mutual funds declined slightly in January from the previous month, as a drop in buying in the sectoral and thematic funds overpowered rising traction of largecaps, data released on Wednesday showed.
The flows declined 3.6% month-on-month to 396.88 billion rupees ($4.57 billion) from 411.56 billion rupees in December 2024, according to data by the Association of Mutual Funds in India (AMFI).
On a month-over-month basis, flows into the largecap funds jumped 52.3% to 30.63 billion rupees in January, the second-highest monthly inflow on record. Flows into smallcap and midcap funds rose 22.6% and 1.1%, respectively.
However, inflows into sectoral and thematic funds fell 41.2% month-on-month to 90.17 billion rupees. These funds, however, saw higher inflows compared with other categories of equity mutual funds for the 13th straight month in January.
The drop came as the number of new sectoral fund launches fell to three in January from 12 in December 2024.
Last month, India’s benchmark NSE Nifty 50 and BSE Sensex fell about 0.6% and 0.8%, respectively, while the broader smallcaps lost 10% and the midcaps shed 6%.
The decline was driven by slowing corporate earnings and domestic economic growth and by foreign portfolio investors (FPI) offloading equities worth about $9 billion – the second-highest monthly outflows on record, analysts said.
“With capital preservation being the key priority amid the ongoing decline in markets, domestic mutual fund investors will continue to shift to large caps where valuations are relatively cheaper compared to the broader markets,” said Nitin Bhasin, head of institutional equities at Ambit Capital.
Contributions to systematic investment plans (SIPs), where investors make regular payments into mutual funds, fell marginally to 264 billion rupees, after hitting a record high in December.