Equity mutual funds ride high in July on improved domestic risk appetite, shows Amfi data

The monthly net inflows in equity-oriented mutual funds rose to a record high of ₹42,702 crore in July, showed data released by the Association of Mutual Funds in India (Amfi) on Monday. The net inflows jumped nearly 81% from ₹23,587 crore in the previous month, indicating a clear revival in domestic risk appetite.

"Intermittent market corrections during the month (of July) on the back of tariff war with the U.S. as well as ongoing geopolitical tension offered investors attractive entry points," said Himanshu Srivastava, principal, manager research at Morningstar Investment Research India.

Among categories, sectoral/thematic funds led the charts with net inflows worth ₹9,426 crore, driven by the launch of seven new schemes that collectively mobilised ₹7,404 crore. "While investor interest in this segment appears to be returning and remains strong, it is important to recognise the higher inherent risks of concentrated thematic bets, warranting alignment with individual risk profiles," said Srivastava.

Flexi-cap funds saw ₹7,654 crore in net inflows, supported by their versatile mandate to seize opportunities across market capitalisations, which continues to appeal to investors.

Broader market-oriented categories also experienced strong growth. Small-cap funds garnered ₹6,484 crore, mid-cap funds ₹5,182 crore, and large and mid-cap funds ₹5,035 crore. Except for ELSS, which experienced net outflows of ₹368 crore, all other equity categories showed positive inflows.

Srivastava said the following three themes defined the month’s trend:  

Resilient retail SIP momentum: Monthly SIP collections touched a record ₹27,269 crore in June, with this momentum continuing into July, providing a stable inflow base across categories.

A supportive market environment: Strong corporate earnings, a stable macroeconomic backdrop, and expectations of a gradual monetary easing cycle kept investors engaged, especially in growth-focussed categories such as flexibles, mid-caps, and small-caps.

Seasonal tax-related redemptions: ELSS redemptions, a post–March/April trend, impacted flows in the category, making it the only equity segment to close the month with a net outflow, said Srivastava.

“Growth of upwards of 25% is seen across categories, from large-cap to flexi-cap and small-cap. Other categories, such as thematic and large and mid-cap, have also experienced very healthy growth. I think Indian retail investors have come of age and are seriously looking at equities as a meaningful allocation to their portfolios. Consistent positive messaging from industry, all stakeholders, and a larger belief in Indian capital markets in the long run seem to be the major reasons for such massive growth,” said Akhil Chaturvedi, ED and chief business officer, Motilal Oswal AMC.