Inflows into India’s small- and mid-cap equity mutual funds surged to record highs in April, signalling sustained investor confidence in domestic equities despite heightened geopolitical tensions and global market volatility.
Data released by the Association of Mutual Funds in India on Monday showed that equity-oriented open-ended mutual fund schemes attracted net inflows of Rs 38,440 crore during the month.
The strong flows came as investors increasingly turned towards broader-market funds following a recent correction, encouraged by resilient corporate earnings and relatively attractive valuations in the small- and mid-cap space.
Small- and Mid-Cap Funds Lead Equity Inflows
Small-cap mutual funds recorded net inflows of Rs 6,562 crore in April, while mid-cap funds attracted Rs 6,886 crore, the highest-ever monthly inflows for both categories.
Large-cap funds, however, witnessed a moderation in investor appetite, with inflows declining 15.3 per cent to Rs 2,525 crore, reflecting a shift towards higher-growth opportunities beyond India’s largest companies.
“This is a notable positioning signal. Small Cap funds have historically seen sharper drawdowns during periods of market stress, and the fact that investors are not only holding but actively adding to this category suggests either renewed confidence in the India growth story at the margin, or an allocation catch-up by investors who see post-correction value in smaller companies,” said Nitin Agrawal, CEO, Mutual Funds, InCred Money.
Flexi Cap Funds Continue to Dominate
Among equity categories, Flexi Cap funds retained their position as the preferred investment avenue, garnering net inflows of Rs 10,147 crore during April, the highest across all equity fund categories by a considerable margin.
Sectoral and thematic funds saw comparatively subdued demand, attracting net inflows of Rs 1,949 crore, significantly lower than the levels seen during their peak months.
Meanwhile, Multi Asset Allocation funds continued to gain traction among investors, drawing net inflows of Rs 5,113 crore during the month.
SIP Contributions Stay Above Rs 31,000 Crore
While overall equity mutual fund inflows eased 5 per cent month-on-month, systematic investment plan (SIP) contributions remained resilient.
SIP inflows stood at Rs 31,115 crore in April, marginally lower than the record levels recorded in March, indicating continued participation from retail investors despite volatile market conditions.
“While April SIP contributions moderated slightly to Rs 31,115 crore from the record levels seen in March, sustaining SIP flows above the Rs 31,000 crore mark itself reflects remarkable resilience in retail participation. It highlights that investors remain committed to long-term investing despite ongoing market volatility,” said Santosh Joseph, CEO of Germinate Investor Services.
“The slight moderation is mainly due to higher crude prices following the Iran war and fewer working days in April, but the broader inflow trend is likely to continue as investors focus on long-term prospects rather than short-term jitters,” said Venkat Chalasani, chief executive of AMFI.
Broader Markets Outperform Benchmark Indices
Robust inflows into broader-market funds coincided with a sharp recovery in small- and mid-cap indices during April.
The Nifty Smallcap 100 advanced 18.4 per cent during the month, while the Nifty Midcap 100 gained 13.6 per cent.
In comparison, the benchmark Nifty 50 rose 7.5 per cent, while the BSE Sensex climbed 6.9 per cent, recovering from the oil-led market correction witnessed in March.
Foreign Investors Continue Selling Indian Equities
Foreign portfolio investors (FPIs), who typically maintain higher exposure to large-cap stocks, have sold Indian equities worth USD 22.17 billion so far in 2026.
The outflows have already surpassed the previous annual record of USD 18.91 billion recorded in 2025, highlighting continued caution among overseas investors amid global macroeconomic uncertainty.
Gold ETFs Rebound, Silver ETFs Witness Outflows
In the commodities segment, gold exchange traded funds (ETFs) saw renewed investor interest during April. Gold ETF inflows rose 34.2 per cent to Rs 3,040 crore, reversing a three-month declining trend. Silver ETFs, however, recorded net outflows of Rs 12,670 crore during the month.
“ETFs and index funds saw strong inflows, while gold ETFs received moderate allocations, reflecting balanced positioning between risk and safety. Overall, April trends indicate renewed allocation to short-term debt post year-end, sustained equity optimism, and increasing preference for diversified strategies, said Umesh Sharma, CIO- debt, The Wealth Company. |
