Inflows into India's equity mutual funds eased 9% month-on-month to 304.22 billion rupees ($3.44 billion) in September as a sharp slowdown in sectoral and thematic funds weighed on overall flows, data from the Association of Mutual Funds in India (AMFI) showed on Friday.
Despite the moderation, investors continued to pour money into equities through monthly investment plans, with contributions through systematic investment plans (SIP) rising to a record high.
SIP contributions rose 4.2% to an all-time high of 294.61 billion rupees in September, helping cushion the impact of a $2.7 billion sell-off by foreign investors amid global trade concerns. The steady domestic flows helped lift the benchmark Nifty 50 (.NSEI) by 0.75% last month.
With September's inflows, equity mutual funds have now seen continuous monthly inflows since February 2021, aided by government reforms and supportive central bank policies.
"It's heartening to see equity flows remain resilient even as IPO activity stayed strong through September," said Anand Vardarajan, chief business officer at Tata Asset Management.
Sectoral and thematic funds, which contributed to the bulk of the decline in total mutual fund flows, saw inflows tumble 69% to 12.21 billion rupees last month, with only one new scheme launched versus two in August.
Among other equity categories, multi-cap funds saw inflows climb 11.5% to 35.6 billion rupees, while small-cap and mid-cap funds dipped 12.6% and 4.6%, respectively. Large-cap inflows fell 18.2% to 23.19 billion rupees.
"While the pace of inflows softened, the trend still reflects strong investor confidence, backed by consistent SIP contributions and robust retail participation," said Nehal Meshram, senior analyst, manager research, at Morningstar Investment Research India.
Meanwhile, some investors rotated into gold and silver ETFs, which drew record monthly inflows of 83.63 billion rupees and 53.42 billion rupees, respectively, as investors looked to benefit from soaring precious metal prices, ahead of Diwali, amid supply shortages.
Kotak Mahindra Asset Management Company temporarily halted fresh lump-sum investments in its silver ETF-of-fund on Thursday to protect investors amid a short-term supply crunch.
($1 = 88.5060 Indian rupees)
