Debt-oriented mutual fund schemes witnessed a sharp reversal in July 2026 following the sizeable quarter-end redemption cycle in June. The short end of the yield curve saw a return of institutional liquidity, with ultra-short duration, low-duration, money market and short-duration funds recording net inflows, reflecting the largely seasonal nature of the June outflows. Duration-oriented categories continued to witness redemptions, albeit at a significantly lower pace, as markets reassessed the impact of higher energy prices, monsoon-related inflation risks and evolving liquidity conditions following recent RBI measures.
Equity fund flows slightly moderated and remained increasingly broad-based. Mid-cap funds continued to attract robust inflows of ₹6,192 crore, while small-cap funds saw stronger inflows of ₹7,768 crore, highlighting investors’ willingness to participate beyond the large-cap universe. In contrast, large-cap funds recorded net outflows of ₹1,322 crore, the first outflow in 31 months, while flows into large & mid-cap funds moderated, indicating continued shift toward higher-growth market segments as large caps has underperformed mid and small caps in recent years.
Among hybrid strategies, arbitrage funds continued to attract strong inflows, while most other hybrid categories witnessed some moderation in investor allocations. Within passive funds, Gold ETFs saw softer inflows as gold prices remained range-bound, whereas Other ETFs recorded strong inflows of ₹9,512 crore.
