Equity Mutual Fund Inflows Ease in October 2025 as Investors Turn Selective

Equity Inflows Cool After Strong Run

After several months of robust growth, equity mutual fund inflows in India moderated in October 2025, suggesting that investors are adopting a more selective, cautious approach. According to AMFI data, net inflows into equity-oriented schemes declined to ₹24,690  crore in October from ₹30,422 crore in September.
Despite the slowdown in fresh investments, total Assets Under Management (AUM) across equity schemes climbed to a record ₹34.8 lakh crore, highlighting sustained investor participation amid resilient market performance.

Mid- and Small-Cap Funds Continue to Attract Interest

Even as headline inflows cooled, midcap and smallcap funds remained the bright spots, drawing steady investor attention.
Midcap funds witnessed net inflows of ₹3,807 Crore, while smallcap funds attracted ₹3,267 crore during October.
These categories also saw an increase in the number of folios, signalling continued retail participation and confidence in India’s broader growth and manufacturing story.
Many investors appear to be tactically increasing allocations to mid- and small-cap themes that offer long-term wealth-creation potential despite short-term volatility.

Large-Cap and Value Funds Lose Momentum

On the other hand, large-cap funds saw a sharp decline in investor appetite, with inflows nearly halving to ₹972 crore.
Value and focused funds faced an even steeper drop, registering an 83% month-on-month decline in inflows.
This shift suggests investors are taking profits in established blue-chip counters while rotating toward diversified opportunities in the broader market.
Analysts believe the moderation in these segments reflects a healthy pause rather than an exit, as investors await better valuations before re-entering.

Thematic Funds Turn Positive Again

After months of muted participation, sectoral and thematic funds made a comeback in October, recording net inflows of ₹1,366 crore.
Investor interest was driven by renewed focus on domestic growth themes such as infrastructure, defence, manufacturing, and digital transformation.
This rebound signals that investors are selectively seeking exposure to long-term policy-driven sectors that align with India’s economic transformation.

Investor Sentiment: Cautious but Constructive

While the overall pace of inflows has eased, investor sentiment remains constructively bullish.
The rise in total AUM to record highs shows that long-term investors continue to stay invested through Systematic Investment Plans (SIPs) and disciplined asset allocation.
The Put-Call Ratio (PCR) in equity derivatives and improving retail folio additions further reinforce optimism in India’s growth outlook.
Experts view the October dip as a consolidation phase before the next leg of inflows, especially as corporate earnings remain strong and liquidity conditions are supportive.

Market Outlook: Rotation, Not Retreat

Market strategists suggest that the current phase marks a rotation rather than a retreat in investor behavior.
While large-caps may consolidate, broader market funds could continue to attract incremental flows amid improving domestic macro fundamentals.
If global volatility remains contained and corporate earnings sustain momentum, equity inflows are expected to pick up again in the coming months.

In short, investors are not exiting equities—they are simply re-balancing portfolios and positioning for selective opportunities in a maturing bull market.

Key Highlights

• Net inflows into equity mutual funds dropped to ₹24,690 crore in October 2025 from ₹30,422 crore in September.
  
  
• Total AUM hit ₹34.8 lakh crore, the highest on record.
  
  
• Midcap and small-cap funds led inflows, while large-cap and value funds slowed sharply.
  
  
• Thematic funds turned positive after months of outflows.
  
  
• Investor sentiment remains cautiously optimistic with a focus on selective opportunities.