Large-cap mutual funds recorded their first monthly net outflow in more than 2.6 years in July as investors booked profits after a sharp rebound in frontline stocks, according to data from the Association of Mutual Funds in India (AMFI).
The category witnessed a net outflow of ₹1,322 crore during the month, compared with an inflow of ₹2,067 crore in June. This came despite the Nifty 50 gaining 2 per cent in July, supported by a strong rally in IT stocks, which delivered their biggest monthly gain in six years even as the broader market remained range-bound.
In contrast, investors continued to favour broader-market funds. Small-cap funds attracted net inflows of ₹7,767 crore, up from ₹5,602 crore in June, while mid-cap funds received ₹6,192 crore, compared with ₹6,090 crore in the previous month.
Overall, inflows into equity mutual funds declined 15 per cent to ₹24,697 crore from ₹28,973 crore in June. Investments in hybrid funds also moderated to ₹11,491 crore, down from ₹12,893 crore.
Venkat Chalasani, Chief Executive of AMFI, attributed the outflows from large-cap schemes to a combination of profit-booking and portfolio reallocation towards mid- and small-cap funds.
On concerns over a proposed fee on certain UPI transactions, Chalasani said it is not yet clear whether mutual fund investments will be covered under the proposal. The industry will assess its response once detailed guidelines are available.
SIP flows stay resilient
Systematic Investment Plan (SIP) contributions remained strong, rising to ₹31,961 crore in July from ₹31,781 crore in June. The number of contributing SIP accounts increased to 9.90 crore, compared with 9.78 crore a month earlier.
Assets under the newly launched specialised investment funds (SIFs) rose 30 per cent month-on-month to ₹23,177 crore, supported by fresh investments of ₹4,922 crore.
Saugata Chatterjee, President and Deputy CEO of Nippon India Mutual Fund, said sustained inflows into mid- and small-cap funds reflect investor confidence in India’s long-term growth prospects. At the same time, continued participation in established equity categories points to a preference for proven investment strategies, despite a slower pace of new fund launches.
Navneet Munot, Managing Director and CEO of HDFC AMC, said investors have responded to market volatility with patience and a long-term approach. He noted that disciplined monthly investments by crores of Indian households have helped create a deep and stable pool of domestic capital.
Akhil Chaturvedi, Executive Director and Chief Business Officer at Motilal Oswal AMC, said there is a cautious stance on equity oriented MF given lower returns over past 2 year period and flows to an extent moved to SIF’s and arbitrage products which are to be low risk and absolute return
Overall mutual fund inflows surged to ₹2.36 lakh crore in July, aided by strong debt fund investments of ₹1.87 lakh crore. Industry assets under management rose to ₹85.76 lakh crore from ₹82.22 lakh crore in June.
Meanwhile, gold ETFs attracted ₹1,559 crore in July. Despite the monthly moderation, net inflows during January-July jumped to ₹38,878 crore, more than four times the ₹9,277 crore recorded in the same period last year, reflecting continued demand for safe-haven assets.
Published on August 11, 2026
