Equity mutual funds saw a strong comeback in March, even as the broader mutual fund industry reported heavy outflows. Fresh data from the Association of Mutual Funds in India (AMFI) shows a clear split in investor behaviour—retail investors stayed invested in equities, while large institutions pulled money out of debt funds.
EQUITY FUNDS SEE STRONG REBOUND
Equity mutual fund inflows rose sharply to Rs 40,450 crore in March, up from Rs 25,978 crore in February. This marks a jump of over 55% in just one month, signalling renewed confidence among investors despite ongoing market volatility.
The inflows were broad-based. Flexi-cap funds led the pack with Rs 10,054 crore, continuing to attract steady interest. Mid-cap and small-cap funds also saw strong buying, with inflows of Rs 6,064 crore and Rs 6,264 crore respectively. Even large-cap funds, often seen as safer bets, witnessed improved participation.
Large and mid-cap funds, multi-cap funds, and focused funds all recorded higher inflows compared to the previous month. However, sectoral and thematic funds saw a slight dip, while ELSS funds continued to face outflows, though at a slower pace.
“TWO VERY DIFFERENT STORIES” IN MARCH
Suranjana Borthakur, Head of Distribution and Strategic Alliances at Mirae Asset Investment Managers (India), summed up the trend clearly:
“March 2026 told two very different stories. Equity funds came back strongly — total equity flows jumped 57% month-on-month to 40,800 crore, with Flexi Cap alone hitting 10,054 crore, its highest-ever single month print.”
She added that investors are increasingly using market dips as buying opportunities, especially in mid- and small-cap segments.
“Small and Mid-Cap funds surged 61% and 51% respectively, confirming investors are treating every correction in the SMID space as a buying opportunity,” she said.
Borthakur also pointed out that systematic investment plans (SIPs) remain strong, with March numbers crossing Rs 32,000 crore, helped partly by spillover from February.
DEBT FUNDS DRAG OVERALL NUMBERS
Despite strong equity inflows, the mutual fund industry as a whole saw net outflows of Rs 2.39 lakh crore in March. This was mainly due to massive redemptions in debt mutual funds.
Debt funds alone recorded outflows of Rs 2.94 lakh crore, a sharp reversal from inflows seen in February. Liquid and overnight funds accounted for a large chunk of these withdrawals, which are typically linked to institutional and treasury adjustments at the financial year-end.
Hybrid funds also saw outflows of Rs 16,538 crore, largely due to redemptions from arbitrage funds.
ETFs AND GOLD SHOW MIXED TREND
Other categories provided some support. Exchange-traded funds (ETFs) and similar schemes saw inflows of Rs 30,768 crore, much higher than the previous month.
However, gold ETFs witnessed moderation, with inflows falling to Rs 2,266 crore after a strong run in earlier months.
INVESTORS TURNING MORE CONFIDENT
Viraj Gandhi, CEO of SAMCO Mutual Fund, said the March numbers reflect growing investor confidence despite global uncertainties.
“In March, equity-oriented funds recorded inflows that were 42% higher than the one-year average,” he said, adding that investors used market corrections to invest for the long term.
He also highlighted strong participation across categories:
“Flexi Cap category led at 10,054 crores, while Mid Cap, Small Cap, and Large Cap categories all meaningfully exceeded their 12-month averages.”
According to Gandhi, there is also a visible shift in investor behaviour. Hybrid funds saw outflows, suggesting that some investors may be moving directly into equities rather than taking a balanced approach.
A CHANGING INVESTMENT PATTERN
The data clearly shows that retail investors are becoming more confident and disciplined. While institutional money continues to move in and out of debt funds based on short-term needs, individual investors are steadily increasing their exposure to equities.
March, in many ways, highlights this shift. Even in a volatile market, investors are not stepping back. Instead, they are choosing to stay invested—and in many cases, invest more.
