Investors are now cyclically shifting to equity ETFs, said Kunal Rambhia, fund manager and trading strategist at
The Streets.
Net inflows into equity-focused mutual funds rose 56% month-on-month to Rs 40,450 crore in March, the highest level since July 2025, data released by the Association of Mutual Funds in India (AMFI) showed.
However, debt-focused funds saw an outflow of Rs 2.95 lakh crore during the month. Overall, the mutual funds industry saw net outflows of Rs 2.40 lakh crore, compared to inflows of Rs 94,530 crore last month.
The contribution of systematic investment plans (SIPs) in mutual fund flows touched a record high of Rs 32,087 crore in March, compared to Rs 29,845 crore in February.
Notably, February was a shorter month, which likely affected the numbers. Flexi-cap funds were the biggest contributor among equity funds, with inflows jumping 45% to Rs 10,054 crore. Mid- and small-cap funds saw inflows rise 51% and 61%, respectively, to Rs 6,063 crore and Rs 6,263.56 crore. All other categories, except sectoral/thematic funds, also saw inflow growth during the month. Overall, the average assets under management (AUM) of equity mutual funds fell to below Rs 32 lakh crore from Rs 35.6 lakh crore the previous month due to the sharp correction in the equity markets during that time.
In March, the benchmark Sensex index fell by over 11% as the conflict in West Asia and the resultant high crude oil prices soured investor sentiment. “While the headline numbers for March 2026, a net outflow of Rs 2,39,910 crore and AUM declining…may spook investors, both are misleading in isolation. The AUM decline is a mark-to-market story driven by a sharp equity market correction during the month, not a confidence story. The net outflow is almost entirely driven by debt fund redemptions, which is a well-established quarter-end phenomenon in March,” said Nitin Agrawal, CEO of mutual funds at InCred Money. “Flexi Cap gains the spotlight as the top segment for inflows, reinforcing the importance of diversification across market caps when volatility is elevated. Mid Cap and Small Cap also witnessed sharp acceleration despite meaningful drawdowns, signalling that value buying opportunities are emerging in these segments,” said Agrawal.
Flows into gold and silver exchange-traded funds (ETFs) remained lukewarm after record highs in January, when they had stolen the spotlight from equity funds. Gold ETFs saw inflows of Rs 2,266 crore in March, down from Rs 5,255 crore in February and the peak of Rs 24,040 crore in January. Outflows in silver ETFs declined to Rs 684 crore from Rs 826 crore a month ago.
“Moderation in Gold ETF flows points to a renewed optimism around equities,” according to Agrawal of InCred.
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However, flows into other ETFs quadrupled to Rs 19,802 crore. Index funds saw inflows nearly tripling to Rs 8,169 crore. Investors are now cyclically shifting to equity ETFs, said Kunal Rambhia, fund manager and trading strategist at The Streets.
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