The buying frenzy that fuelled Indian equity markets in recent months showed signs of fatigue in May, as net inflows into equity mutual funds dropped nearly 22% month-on-month to ₹19,013.12 crore, according to data released by the Association of Mutual Funds in India (AMFI) on 10 June. With this, equity inflows have gradually moderated each month in 2025 thus far.
"A downtick in equity net sales in May was largely on account of higher month-on-month redemptions. This was probably due to the war-like situation in the beginning of the month leading to sentiment being cautious,” said Akhil Chaturvedi, executive director and chief business officer, Motilal Oswal AMC.
Jatinder Pal Singh, CEO, ITI Mutual Fund echoed similar views over the slowdown in net equity inflows, as he attributed it to several factors, including a rise in equity market performance in May, and a potential phase of consolidation or profit booking by investors.
“Additionally, rising global volatility, which was triggered by geopolitical tensions following India’s launch of Operation Sindoor against Pakistan and ongoing concerns over global inflation fuelled a risk-off sentiment among certain investors,” Singh added.
Among equity oriented mutual fund schemes, flexi-cap funds emerged as the fan favourite, attracting flows of around ₹3,841.32 crore. Among segments however, it was smallcap funds that stole limelight, raking in mutual fund flows worth ₹3,214.21 crore, followed by midcap schemes at ₹2,808.68 crore, and finally large-caps funds at ₹1,250.47 crore.
Now while overall equity fund flows moderated in May, mark-to-market gains across Indian equities boosted the overall net assets under management (AUM) of the mutual fund industry to Rs 72.20 lakh crore, up from Rs 69.99 lakh crore in April. With this, the mutual fund industry’s total AUMs moved past the Rs 70 lakh crore mark for the first time ever.
Overall, the mutual fund industry saw net inflows of Rs 29,108.33 crore in May. Out of the total, open ended schemes brought in flows worth Rs 29,572.98 crore, staying firm in the positive territory since March 2021.
On the other hand though, close ended schemes saw outflows of Rs 437.38 crore and interval schemes lost investments of Rs 27.27 crore in May.
Gold ETFs Surge
After a subdued spell, gold exchange-traded funds (ETFs) appear to be regaining their shine. The segment recorded a net inflow of ₹291.91 crore in May, a turnaround from the marginal outflow of ₹5.82 crore in April.
Flows had remained muted over the past two months, with modest outflows in March. However, May’s figures signal a gradual return of interest, pointing to a shift in sentiment.
This renewed traction likely stems from gold’s resilient performance amid ongoing geopolitical uncertainties. With equity and bond markets continuing to deliver mixed cues, gold has reasserted its role as a reliable hedge, offering a sense of stability in volatile times.
