In January, inflows into equity mutual funds surged to a 22-month peak, propelled by sustained investments in sectoral, mid-cap, and small-cap funds, alongside a robust performance by large-cap funds.

 

According to data from the Association of Mutual Funds in India (Amfi), net inflows into equity mutual funds escalated by 28% sequentially to Rs21,780.56 crore in January, marking the highest influx since March 2022.

 

The buoyancy in the equity segment was further buoyed by the introduction of three new fund offerings in January, cumulatively amassing Rs967 crore.

 

The surge in systematic investment plan (SIP) accounts to an unprecedented 79.20 million in January 2024, along with a milestone of 5.18 million new SIP registrations, underscores investors' steadfast commitment to disciplined wealth accumulation, demonstrating a robust era of growth and participation through financial savings instruments.

 

In tandem with the uptick in equity mutual fund inflows, the mutual fund industry's assets under management (AUM) soared to an impressive Rs52.74 trillion in January from Rs50.77 trillion in December, showcasing the industry's robust appeal and resilience. Notably, January marked the 35th consecutive month of inflows.

 

Despite apprehensions about valuations, small and mid-cap funds sustained their allure, witnessing substantial inflows. Mid-cap funds saw a 48% month-on-month rise in January to Rs2,061.18 crore, while small-cap funds registered Rs3,256.9 crore in net flows for the fourth consecutive month, albeit recording a sequential decrease of Rs600 crore.

 

The upswing in these segments is mirrored by the sharp rally witnessed in both the mid-cap and small-cap indexes over the past six months and one year, drawing investors' increasing interest.

 

However, Santarita, a financial expert, advised investors to tread cautiously in these segments due to their inherent volatility, advocating a long-term perspective and the SIP route to mitigate risks and leverage dollar-cost averaging.

 

While January witnessed a mixed performance in Indian stock markets, with the benchmark Nifty50 concluding the month marginally lower, small-cap and mid-cap indices defied the trend, notching positive returns. The Nifty Smallcap 250 index surged by 6.6%, whereas the Nifty Midcap recorded nearly a 4% rise, underscoring the resilience of these segments vis-a-vis the broader market.

 

Interestingly, large-cap funds also witnessed a resurgence, attracting Rs1,287 crore in inflows, the highest in 19 months, following a Rs281 crore outflow in December.

Furthermore, debt funds staged a comeback after two consecutive months of outflows, garnering Rs76,469 crore in January. The liquid fund category led the pack with net inflows of Rs49,468 crore, followed by money market funds at Rs10,651 crore and overnight funds at Rs8,995 crore.

 

Notably, mutual fund folios surged to a historic peak of 169.5 million in January, with retail MF folios, encompassing equity, hybrid, and solution-oriented schemes, also reaching a pinnacle at 135.68 million.

 

Moreover, monthly SIP contributions hit an all-time high of Rs18,838 crore in January, up from Rs17,610 crore in December, highlighting investors' growing affinity towards systematic investment planning.