Synopsis: A decline of nearly 40% in the equity mutual fund net inflows dropped sharply from ₹38,440 crore in April 2026 to ₹22,908 crore in May 2026, in a single month.
The mutual fund industry in India is now around ₹81 lakh crore. In April 2026 people invested in equity-oriented schemes and the total was ₹38,440.20 crore. This happened because the total inflow was ₹70,302.06 crore and the total outflow was ₹31,861.86 crore. But in May 2026, the India mutual fund industry saw a change. The money going into equity schemes was less around ₹22,907.77 crore, the total inflow was ₹57,603.83 crore and the total outflow was ₹34,696.05 crore.
Source: AMFI Monthly Reports (April 2026 and May 2026)
Which Categories Took the Biggest Hit?
Here is a category-wise comparison of net inflows between April 2026 and May 2026,
Source: AMFI Monthly Reports (April 2026 and May 2026)
Investors of sectoral funds witnessed a sharp decline, and are hence becoming risk-averse. Investors who started putting money in the market when it was doing really well are now observed to be nervous when the market is going down in this volatility and uncertainty. Thematic and sectoral funds are the ones facing these effects.
Why Are Investors Pulling Back?
Three possible factors for the April-May decline,
- Profit booking: After years of robust post-COVID returns, many investors locked in gains and rebalanced their portfolios. People tend to do this when equity valuations seem high.
- Geopolitical uncertainty: Rising concerns around crude oil prices and global instability has led investors to stop any new investments and wait for the uncertainty to mitigate.
- Asset class diversification: Investments in gold for example gold ETFs are around ₹3,040 crore in April 2026. This shows that investors are looking for places to put their money like gold because they think it is more secure.
SIP Investments
SIP contributions were still very high in May 2026 at over ₹30,000 crore. They actually fell by about 1% from the previous month. This is a sign that investors who invest regularly through SIPs are staying on track and are not easily swayed by short-term market fluctuations. It seems that the people pulling back are mostly those who invest a lump sum.
All in all
History shows that when people are uncertain they invest into stocks but this does not last long. We saw this during the COVID-19 pandemic. The same thing is happening now. The investor participation is declining due to the short-term uncertainty and volatility in the market, but despite the low equity inflows, the mutual fund industry continues to manage assets exceeding ₹81 lakh crore.
Written by Jahnavi
