India equity fund inflows rise 26% as retail money defies volatility
Sustained domestic retail inflows pushed Indian equity mutual fund investments to ₹1.8 lakh crore in the first half of 2026, providing a critical liquidity buffer against global market turbulence.
Indian equity mutual funds attracted net inflows of ₹28,973 crore in June, marking a 26% increase from the previous month. The surge defied heightened global market volatility and reinforced the growing dominance of domestic retail capital in the country's financial markets.
The June figures brought first-half 2026 net equity inflows to ₹1,80,778 crore, a 12% increase from the same period last year. This steady accumulation pushed the broader mutual fund industry's assets under management to ₹82.22 lakh crore.
That overall AUM growth occurred despite the industry posting a net outflow of ₹52,949 crore for the month. The deficit was driven entirely by a massive ₹1.09 lakh crore withdrawal from debt-oriented schemes, pointing to a significant rotation out of fixed income.
Within the equity space, mid-cap and small-cap funds dominated capital allocation. Mid-cap funds led June inflows with ₹6,090 crore, followed closely by small-cap funds at ₹5,602 crore. The sustained appetite for these smaller, riskier segments signals that individual investors are largely ignoring concerns over elevated valuations.
Diversified strategies also drew significant interest, with flexi-cap funds pulling in ₹5,231 crore and large & mid-cap funds adding ₹4,321 crore. Meanwhile, investors rotated back into safe-haven assets.
Gold exchange-traded funds saw a sharp reversal to ₹3,443 crore in net inflows, recovering from a ₹725 crore outflow in May. Conversely, tax-saving ELSS funds continued to post net outflows as the new tax regime reduces the appeal of traditional exemptions.
"The rebound indicates that investor confidence remains resilient despite ongoing global uncertainties and periodic market volatility," said Nehal Meshram, Senior Analyst at Morningstar Investment Research India. "Improved market sentiment, expectations of supportive domestic macroeconomic conditions, and continued strength in retail participation helped support flows during the month."
"The continued preference for diversified and growth-oriented categories suggests that investors remain constructive on India's long-term growth prospects while maintaining a disciplined and long-term investment approach," Meshram added.
The primary market for new funds showed little of this enthusiasm, however. The new fund offer market remained subdued, with only one equity fund launching in June and raising a modest ₹87 crore.
