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Indian Equity Mutual Funds Record 61st Consecutive Month of Inflows at ₹40,450 Crore in March 2026
Despite market volatility and geopolitical tensions, equity mutual funds in India witnessed their 61st straight month of inflows in March 2026, with SIP contributions reaching an all-time high of ₹32,087 crore.
Indian equity mutual funds continued their remarkable run, recording the 61st consecutive month of inflows with net contributions of ₹40,450 crore in March 2026. This sustained momentum highlights the growing maturity of Indian retail investors and their commitment to systematic wealth creation despite challenging market conditions.
Market Turmoil Fails to Deter Investor Confidence
The March inflows came against a backdrop of significant market volatility. The Sensex plunged 11.5% during the month, falling to 71,948, while the broader Nifty index declined 11.3% to settle at 22,331—marking the steepest monthly falls witnessed in several years. The selloff was triggered by escalating hostilities in West Asia and broader geopolitical uncertainties that rattled global markets.
Despite this turbulence, industry assets under management (AUM) stood at ₹72.73 lakh crore at the end of February, down from ₹82.03 lakh crore recorded earlier. The decline in AUM was primarily attributable to mark-to-market losses rather than investor redemptions, underscoring the resilience of domestic capital flows.
SIP Dominance Reaches New Heights
The standout feature of March's inflow data was the unprecedented contribution from Systematic Investment Plans (SIPs), which surged to an all-time high of ₹32,087 crore. This represents a significant increase from February's ₹31,002 crore and underscores the deepening adoption of disciplined investment strategies among Indian households.
The number of active SIP accounts rose from 94.4 million in February to 97.1 million in March, even as 5.34 million SIPs were discontinued during the month, against 5.28 million new registrations. The net addition of SIP accounts reflects sustained investor conviction in long-term wealth creation through equities.
Navneet Munot, MD & CEO of HDFC AMC, commented that "the high SIP inflows highlight the deepening trust of Indian investors in systematic, long-term wealth creation." He added that steady participation during periods of uncertainty reflects a structural shift towards financial discipline.
Category-Wise Performance Analysis
Within the equity mutual fund universe, flexi-cap and small-cap funds emerged as popular choices during the month. According to Vaibhav Chugh, CEO of Abakkus Mutual Fund, flexi-cap schemes have gained traction due to the variety available across market capitalizations.
Small-cap and mid-cap schemes received inflows of ₹6,264 crore and ₹6,064 crore respectively—significantly higher than February's levels. This investor preference for smaller-cap exposure reflects a tactical approach to capitalize on attractive valuations following the correction in stock prices.
Passive investment vehicles also witnessed robust interest. Passive schemes attracted ₹30,768 crore in inflows, more than double February's ₹13,879 crore. Within this category, index funds garnered ₹8,169 crore while non-commodity ETFs accounted for ₹19,802 crore.
Sector and Thematic Funds Experience Volatility
Interestingly, sectoral and thematic funds saw mixed performance. Net assets in this category increased 12.11% in FY26, from ₹65.74 lakh crore to ₹73.73 lakh crore. However, monthly inflows declined from ₹4.17 lakh crore in February to ₹3.47 lakh crore in March, suggesting investors may be adopting a more cautious stance towards concentrated sector bets amid market uncertainty.
Foreign Institutional Investor Selling Continues
In contrast to domestic inflows, Foreign Portfolio Investors (FPIs) remained net sellers, offloading ₹1.12 lakh crore worth of stocks in March. DIIs (Domestic Institutional Investors) stepped in as net buyers, purchasing ₹1.43 lakh crore during the same period. This divergence between foreign and domestic capital flows has become a defining characteristic of Indian equity markets in recent months.
Hybrid and Arbitrage Funds Attract Interest
Beyond pure equity products, hybrid category funds experienced a decline despite their defensive characteristics. Multi-asset allocation funds saw the highest inflows at ₹5,213 crore, while arbitrage funds witnessed net outflows of ₹21,114 crore. The redemptions in arbitrage funds were attributed to seasonal outflows during the financial year-end, as experts noted investors typically rebalance portfolios during this period.
Outlook and Implications
Suranjana Borthakur, head of distribution at Mirae Asset Investment Managers, attributed the high inflows in small and mid-cap schemes to year-end portfolio rebalancing by institutional investors. Industry experts believe the rebalancing activity is a natural market mechanism rather than a reflection of changed sentiment.
The consistent inflow trajectory, now extending to 61 months, demonstrates a fundamental transformation in Indian household savings behavior. The shift from traditional instruments to market-linked products reflects growing financial literacy, increased awareness of equity as an asset class, and confidence in India's long-term growth story.
As geopolitical uncertainties persist and market volatility continues, the resilience of SIP flows and domestic investor participation will remain critical factors supporting market stability and providing a counterbalance to volatile foreign capital flows.
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