Gold Outperformed Equities In July, But ₹1.4 Lakh Cr Flows Into Money Market Funds

Gold rose 9% in July, outperforming the broader equity market several times over, but investors appeared more inclined to move money towards safer assets than chase the rally, according to Vallum Capital's Monthly Macro Grid Chartbook for August 2026.

The report showed that ₹1,40,390 crore flowed into money market funds in July, compared with an outflow of ₹65,530 crore in June.

The gold rally was triggered by a weaker-than-expected US jobs report, which briefly eased concerns about another interest rate hike by the US Federal Reserve, Vallum Capital said. Failed coordinated intervention in the yen was another factor supporting the move.

While gold, mining stocks and precious metal funds rallied, investor flows into precious metals moderated. Inflows fell to ₹4,084 crore in July from ₹8,680 crore in June, suggesting investors did not substantially add to the asset class after its sharp gains, the report said.

It is important to be noted that Vallum Capital classifies money market funds under an internal framework that differs from AMFI, aggregating funds and ETFs across categories including liquid, overnight, money market and short-duration strategies.

Fixed Income Also Sees Turnaround

Fixed-income funds recorded inflows of ₹5,947 crore in July after outflows of ₹53,006 crore in June, marking a turnaround of ₹58,954 crore.

The movement across fixed income and money market categories indicated a broader preference for relatively safer assets even as markets moved higher, Vallum Capital said.

Within Indian equities, Auto was the strongest thematic performer, gaining 10.3% during the month, followed by Transportation and Logistics at 9.2% and Technology at 8.3%. The report linked the strength in automobile stocks to India's passenger vehicle sales crossing four lakh units for the first time in July.

Technology recovered as global investors rotated away from Korean semiconductor stocks towards Indian software companies, the report said. However, investors appeared to sell into the rebound, with technology fund flows declining by ₹225 crore between the two months covered in the thematic table.

Healthcare, meanwhile, gained 2.2% during the month and was up 16.9% year-to-date, while its fund flows rose to ₹345 crore from ₹15 crore, according to the report.

Large-Cap Inflows Rise

Among equity categories, Micro-Cap led with a 4.6% one-month return and 15.9% year-to-date gain. Small-Cap funds rose 2.8% during the month.

Large-Cap funds, however, returned just 0.7% in one month and remained down 3.9% year-to-date.

Yet, they attracted ₹14,977 crore in July, up from ₹9,686 crore in June, the largest increase in flows among the categories listed.