A strong influx of domestic investors has been the highlight of Indian stock markets in the last few years. Mutual funds, in particular, have seen a surge in inflows as investors latched on the idea of systematic investments. Amid falling markets in the wake of a huge sell-off by foreign institutional investors, inflows into equity funds had declined in November 2024. But, the equity flows have rebounded in December, suggesting that despite the initial nervousness, domestic investors continue to bet on equity despite volatile markets.
According to the latest data from the Association of Mutual Funds of India (AMFI), equity mutual fund schemes saw inflows of Rs 41,155.91 crore in December 2024, up from Rs 35,943.49 crore in November. This was the 46th month of positive equity inflows, starting March 2021.
All equity mutual fund schemes saw inflows in December, with sectoral/ thematic schemes getting inflows of Rs 15,331 crore. Also, inflows into mid cap (Rs 5,093 crore) and smallcap (Rs 4,668 crore) schemes were significantly higher than the flows into large-cap schemes (Rs ,2011 crore). This comes even as experts have been suggesting that investors would be better off with large caps over mid and smallcaps amid the market volatility this year.
The continued inflows "underscores maturity of Indian investors and behaviour change, considering backdrop of market volatility and economic slowdown," said Sanjay Bembalkar, head of equity at Union Asset Management.
Notably, the month had seen the launch of 12 index funds and two exchange traded funds (ETFs).
In recent years, retail participation in equity via systematic investment plans (SIPs) has surged. In December, SIP contributions topped Rs 26,459 crore, up from around Rs 25,319 crore in the previous month. Overall SIP AUM (assets under management) stood at Rs 13.63 lakh crore in December.
"Despite market volatility, SIP numbers have remained strong, reflecting retail investor confidence in long-term investments in India. The near 50 per cent growth in SIPs over the past year is a testament to the strong conviction of investors," said Suranjana, Borthakur, head of distribution and strategic alliances at Mirae Asset Investment Managers (India).
Overall though, net AUM for the mutual fund industry declined to Rs 66.93 lakh crore from Rs 68.08 lakh crore due to outflows from debt schemes.
Debt mutual funds saw outflows of over Rs 1.27 lakh crore in December 2024, compared with Rs 12,916 crore of inflows in November. Large outflows were seen in liquid funds, overnight funds and money market funds, typically due to the end of the quarter when corporate redemptions rise to meet advance tax payments.
