India’s equity net fund flows surge 11 pc in March led by manufacturing, infra

New Delhi, April 17 Equity net fund flows improved from Rs 41,934 crore in February to Rs 46,501 crore in March, marking an increase of about 11 per cent, a new report said on Friday.

The report from Vallum Capital said total net asset flows swung sharply in March as investors rotated into equities but retreating to quality and simplicity, while leaving money‑market and fixed‑income funds.

The report noted a sharp rebound in Indian equities that attracted Rs 59,629 crore of inflows. Small‑caps rose 8.1 per cent, mid‑caps surged 6.9 per cent and large‑caps climbed 4.8 per cent on a one‑month basis, though year‑to‑date returns remain negative across the board.

However, money‑market net fund flows reversed sharply from Rs 42,800 crore in February to Rs -1,94,775 crore in March, while fixed‑income outflows widened from Rs -16,919 crore to Rs -76,354 crore, suggesting redemption pressure or sensitivity to interest rates.

Inflows in commodities remained positive but subdued, suggesting cooling investor interest as momentum in precious metals stabilised.

Total net asset‑level flows flipped from Rs 73,589 crore in February to Rs -220,797 crore in March, driven largely by the massive money‑market outflow.

“The dominant global theme is a weakening US dollar and a rotation away from American exceptionalism. On thematic ETFs, the global winner is unambiguous — semiconductors and AI infrastructure,” the report said.

Non-US equity, commodities, and domestic capex themes are outperforming in 2026. Gold and silver have structural demand, it said, noting that manufacturing, infrastructure, and defence have replaced PSU and consumption as the cycle's preferred thematic within India.

The report noted that the flow data confirmed investors are already repositioning accordingly.

Money is rotating into safety as large-cap funds absorbed Rs 28,558 crore in March inflows, posting a surge of Rs 19,242 crore from February. Flexi-cap and mid-cap saw steady additions. Meanwhile, arbitrage funds posted Rs 22,182 crore in outflows, and dynamic strategies also bled capital.

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