Will mutual funds keep supporting India’s stock indices or will this Atlas shrug?

Such funds have been a major source of strength for share prices as foreign investors have been withdrawing money, but their inflow moderation points to the limits of this heroic role. Household investors may have turned a tad cautious. Understandably so. The conflict between the US and Iran is far from over and the Strait of Hormuz still has hydrocarbon markets gasping for supply.

This is weighing on the global economy, including India’s, whose widening trade gap comes at a particularly dry time in terms of capital flows, putting the rupee in a precarious place.

On the bright side, the equity MF dip isn’t all that big and contributions through systematic investment plans (SIPs) have held firm at ₹31,115 crore, not much below their record-high of ₹32,087 crore in March. Overall, there is no sign of MFs running low on investor funds in a way that would leave market indices short of support.