In March, equity mutual fund inflows soared to their highest level in eight months, showcasing a resilient commitment from domestic investors even amid market turbulence. Their increased investments played a crucial role in balancing out the recent foreign fund exits. Moreover, contributions via Systematic Investment Plans (SIPs) surged to unprecedented figures.

MFs gain during market pain: Net flows zip 56% in march

Synopsis

In March, equity mutual fund inflows soared to their highest level in eight months, showcasing a resilient commitment from domestic investors even amid market turbulence. Their increased investments played a crucial role in balancing out the recent foreign fund exits. Moreover, contributions via Systematic Investment Plans (SIPs) surged to unprecedented figures.

Net flows into equity mutual funds surged 56% in March-the highest in eight months-as investors stepped up allocations into these schemes amid the sharpest monthly market decline in five years.

Domestic equity flows have helped counterbalance sustained exits by foreign funds, which in FY26 were net sellers in four of the past five financial years, pulling out a record $16 billion from Mumbai-listed securities.

Equity schemes received a net ₹40,450 crore as against February's ₹25,978 crore. Collections through SIPs touched an all-time high of ₹32,807 crore compared to February's ₹29,845 crore.

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However, the SIP stoppage ratio in India hit 101% in March, with the number of stopped or completed Systematic Investment Plans (5.34 million) exceeding new registrations (5.28 million).

March marks the 61st straight month of inflows into equity schemes led by record monthly systematic investment plan (SIP) investments, even as total assets under management of the industry took a knock due to the market sell-off and outflows from debt funds.

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Government bond yields climbed nearly 50 basis points through March to breach the 7% barrier before central bank measures to stem the rupee's decline caused yields to retreat below 7% earlier this week. Yields climbed and portfolio exits accelerated as the rupee, which lost the most in 14 years last fiscal, slid more than 4% in March.

AUM Down on Bear Run

"Despite heightened volatility driven by geopolitical developments, domestic investors have remained steadfast, continuing to invest with conviction," says Navneet Munot, CEO, HDFC Mutual Fund.

A study by Samco Mutual Fund showed flows into equity-oriented funds in March were 42% higher than the one-year average, net inflows of Rs 28,586 crore.

The erosion in market values following the near-5% drop in Sensex and Nifty caused the mutual fund industry's AUM to decline by 10.4% to Rs 73.48 lakh crore from the previous month, according to industry body AMFI.

Within equity schemes, the flexi-cap category received the highest allocation of Rs 10052 crore as against Rs 6925 crore in February. Mid- and small-cap schemes drew Rs 6064 crore and Rs 6253 crore, respectively, in March compared to Rs 4003 crore and Rs 3881 crore in the previous month. Debt schemes saw outflows after corporates withdrew money from liquid, overnight and ultra short funds to meet their seasonal advance tax obligations before March 31.

"Such outflows at the shorter end of the curve are a recurring seasonal trend, as March coincides with both quarter-end and financial year-end liquidity requirements, a pattern observed each year consistently," says Umesh Sharma, CIO- Debt, The Wealth Company Mutual Fund

With precious metal prices-investors' darlings in January and February-- declining, flows into gold ETFs dipped to Rs 2266 crore compared to Rs 5255 crore in the previous month.

Among hybrids, arbitrage funds-a popular category among investors to park idle money--saw outflows of Rs 21,113 crore compared to inflows of Rs 592 crore in February. Concerns that returns would come under pressure following higher Securities Transaction Tax (STT) rates on futures and options kicking in from April 1, and investment restrictions in debt contributed to the outflows. Arbitrage schemes aim to benefit from the price anomalies between stocks and their futures contracts.

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