Analysts attributed the equity inflow dip to geopolitical risks, including India’s tensions with Pakistan and global tariff uncertainties.
Inflow into equity mutual funds was down 3 per cent last month to a one-year low of ₹24,269 crore, against ₹25,082 crore logged in March, as investors moved their money to hybrid funds due to intense volatility in the equity market amid geopolitical tension.
Flexi and small-cap funds registered the highest inflows of ₹5,542 crore (₹5,615 crore) and ₹4,000 crore (₹4,092 crore) while mid-cap funds attracted investment of ₹3,314 crore (₹3,439 crore, according to the Association of Mutual Funds in India data released on Friday.
The benchmark Sensex jumped 4 per cent, while NSE Nifty increased 3 per cent in April.
Inflows through SIP bounced back to ₹26,633 crore (₹25,926 crore) as the contributing SIP accounts increased three per cent last month to 8.38 crore against 8.11 crore in March.
However, the discontinued SIP accounts jumped sharply to 1.36 crore (52 lakh), while the new SIP opened was up at 46 lakh (40 lakh).
Venkat Chalasani, CEO of AMFI, said the work on reconciling discontinued SIP accounts has been completed. From next month, the discontinued SIP accounts should be back in the normal range of 35-40 lakh, depending on market movements.
Going ahead, he said the volatility in the market will continue due to current geopolitical developments, but investors should not react to rumours as the country’s long-term future is still intact.
Himanshu Srivastava – Associate Director- Manager Research, Morningstar Investment Research India, said the drop in equity inflows was driven by mounting global uncertainties, particularly the intensifying US-led tariff war and the deteriorating regional security climate.
Few investors have adopted a cautious stance, reassessing their risk appetite particularly in emerging markets such as India that are vulnerable to external shocks, he added.
Karthick Jonagadla, small case manager and Founder at Quantace, said the ongoing India’s response to Pakistan-sponsored terrorism injects a geopolitical risk premium, and post-confrontations will typically shave 10 per cent off next-month inflows.
Manish Mehta, National Head—Sales, Marketing & Digital Business, Kotak Mahindra AMC, said lump sum participation in equity funds has come down as investors are probably taking a waiting approach to fresh investments.
Hybrid funds attracted investment of ₹14,247 crore (-₹947 crore) largely due to an inflow of ₹11,790 crore (-₹2,855 crore) in Arbitrage funds and ₹881 crore (₹294 crore) in Balanced Advantage funds.
The inflow in debt funds reversed to ₹2.19 lakh crore (₹2.03 lakh crore) after investors attempted to take advantage of the fall in interest rates. The industry raised ₹350 crore through the launch of 7 new fund offers.
Overall, the MF industry’s inflows last month were ₹2.77 lakh crore, as AUM moved up to ₹70 lakh crore (₹65.74 lakh crore).
The quantum of flows remains significant, especially in the backdrop of a challenging global landscape and escalating geopolitical tensions between India and Pakistan following the Pahalgam terrorist attack on April 22.
Published on May 9, 2025
