Equity mutual fund inflows in India surge to unprecedented levels in July
Record Equity Mutual Fund Inflows in July 2025 Boost Indian Stock Market
Foreign investors withdrew $2 billion from the Indian stock market in July due to lingering uncertainty about a U.S.-India trade deal and concerns over another quarter of weak earnings. Despite this outflow, India witnessed record equity mutual fund inflows of ₹42,702 crore in July 2025, an 81% jump from ₹23,587 crore in June.
The massive inflows signify growing domestic investor participation and increasing demand for equities despite short-term volatility. The rise in fund inflows supports liquidity and may cushion further market corrections by providing fresh buying power.
The surge in inflows can be attributed to several factors. New Fund Offerings (NFOs) raised an unprecedented ₹30,416 crore from 30 schemes, driven by major launches like HDFC Innovation Fund, ICICI Prudential Active Momentum Fund, Sundaram Multi-Factor Fund, and Bajaj Finserv Small Cap Fund. SIP contributions reached a record ₹28,464 crore, showing steady, long-term investor commitment.
Investor confidence despite the market dip also played a significant role. Even as frontline indices fell by around 3% and mid/small caps corrected, investors viewed the dip as a buying opportunity, indicating a maturing investor base that avoids market timing and invests systematically.
Sectoral/thematic funds saw the largest inflows (~₹9,426 crore), followed by flexicap (₹7,654 crore), mid-cap (₹5,183 crore), and small-cap schemes (₹6,484 crore, up 61% month-on-month). However, ELSS funds recorded net outflows (~₹368 crore).
The total Mutual Fund Assets Under Management (AUM) rose to ₹75.36 lakh crore, hitting an all-time high and indicating expanding investor wealth and confidence. The number of contributing SIP accounts in India increased to 91.1 million in July from 86.4 million in June.
The combined effect is a positive structural change with enhanced retail participation, potentially reducing market volatility over time. A Balasubramanian, MD and CEO at Aditya Birla Sun Life AMC, stated that the rise in mid-cap, small-cap, and sectoral fund participation signals a growing appetite for diversified growth.
Inflows into Gold Exchange Traded Funds were at ₹12.56 billion rupees, while inflows into Silver Exchange Traded Funds were at ₹19.04 billion rupees. Despite ongoing geopolitical tensions and U.S.-India trade uncertainty, the increase in net flows and contributions via SIPs occurred.
Equity mutual funds in India saw inflows for the 53rd month in a row in July. Large-cap funds attracted ₹21.25 billion, up 25.5% from June. Mid-cap allocations rose 38% to ₹51.82 billion rupees.
The statement from A Balasubramanian indicates a sign of market maturity in a period of uncertainty. Himanshu Srivastava, principal, manager research at Morningstar Investment Research, stated that intermittent market corrections offered investors attractive entry points. The record high assets under management in the MF industry was achieved in July, with overall assets under management in the MF industry in India reaching a record high at ₹75.36 trillion rupees.
- The record equity mutual fund inflows of ₹42,702 crore in July 2025, despite foreign investor outflows, signify a growing domestic interest in equities, supporting liquidity and potentially cushioning market corrections.
- Sectoral/thematic funds saw the largest inflows, followed by flexicap, mid-cap, and small-cap schemes, indicating a growing appetite for diversified growth among investors.
- Inflows into Gold Exchange Traded Funds were ₹12.56 billion rupees, while Silver Exchange Traded Funds saw inflows of ₹19.04 billion rupees, suggesting a continued interest in precious metals as assets.
- The record high assets under management in the MF industry was achieved in July, with overall assets under management in the MF industry in India reaching a record high at ₹75.36 trillion rupees, suggesting a maturing finance market and increased investor confidence.
