Small-cap fund inflows cool in October while large-cap funds gain favour. Is the investor mood changing?
Equity mutual fund inflows fell about 14% month-on-month to ₹32,994 crore in October, compared with ₹38,307 crore in the previous month, as investments in the small- and mid-cap funds eased from record highs.
Small-cap fund inflows declined 29% to nearly ₹6,408 crore, while mid-cap fund inflows fell 38% to ₹4,893 crore, according to data released by the Association of Mutual Funds in India (AMFI).
Net inflow refers to the money a particular mutual fund category receives after subtracting repurchases and redemptions from funds mobilised.
However, the trend changed for large-cap funds, which recorded a 20% increase in inflows to ₹1,032 crore in October, compared with ₹859 crore last month.
This marks the second consecutive monthly rise in investments in large-cap funds, suggesting a correction in valuations has renewed retail investor interest.
“Within equities, the continued improvement in large-cap inflows is encouraging, particularly as valuations have become relatively attractive, suggesting investors are increasingly looking to balance their exposure across market capitalisations,” Saugata Chatterjee, President and Deputy chief executive at Nippon India Mutual Fund, said in a statement.
The difference in market performance during October may also explain the shift. The benchmark Nifty 50 and BSE Sensex gained 1.9% and 2.7%, respectively, while small-caps and mid-caps fell 4.1% and 3.4%.
Market sentiment has further improved in November, with benchmark indices rising around 10% so far this month, putting them on track for their strongest monthly gains since November 2020, Reuters reported.
While inflows into small- and mid-cap funds moderated in October, these segments continue to remain strong, reflecting sustained investor confidence in the country's long-term economic growth story, Chatterjee added.
For quite some time, as AMFI data shows, investors have been moving towards small- and mid-cap funds, attracted by their relatively strong performance compared with large-cap funds across several periods.
A lot of India's newer growth themes, defence manufacturing, capital expenditure, electronics, manufacturing, digital businesses and new-age consumption are not yet fully represented in the large-cap universe, making small and mid cap funds attractive, experts told Livemint earlier.
However, small-cap investing involves higher risk than many large-cap-oriented schemes, as small-cap stocks can experience sharp price movements in both rising and falling markets. Shares of smaller companies may be traded less frequently than large-cap stocks, which can impact liquidity.
Monthly contributions through systematic investment plans (SIP), a popular investment route among retail investors, declined slightly to ₹32,162 crore in October from ₹32,490 crore in September. This coincided with the fall in overall equity mutual fund inflows during the month.
The AMFI data also showed that more investors discontinued their SIPs than registered new ones in October, pushing the SIP stoppage ratio to 116%, its highest level since April 2025.
The SIP stoppage ratio measures the number of SIPs discontinued or whose tenure has ended against the number of new SIPs registered during a month. A ratio above 100% indicates that more SIPs were stopped than new ones started.
In October, 5.9 lakh SIPs were either discontinued or completed their tenure, while 5.1 lakh new SIPs were registered. The stoppage ratio was 79% in September, according to the previous month's data.
Eshita Gain is a digital journalist at Mint, where she joined in May 2025. She writes on corporate developments, personal finance, markets, and business trends, with a focus on delivering timely and relevant stories to a broad audience. <br><br> While her core beat lies in business and finance, she is not confined to a single niche and frequently explores stories across domains, including international relations and policy developments. <br><br> She holds a postgraduate diploma in business and financial journalism by Bloomberg from the Asian College of Journalism (ACJ), Chennai. During her time there, she received rigorous training in tracking financial data, interpreting corporate filings, and reporting on business developments. She has pursued her graduation from St. Joseph’s University, Bengaluru in a multi-disciplinary course. Her majors included Journalism, International Relations, peace and conflict studies. <br><br> Eshita has previously worked in digital marketing, which enables her to write SEO friendly copies that are clear and engaging. <br><br> Her primary interest lies in breaking down complex subjects and writing clear, accessible copies that inform readers. She aims to bridge the gap between technical financial language and everyday understanding. Outside the newsroom, Eshita enjoys reading non-fiction, and exploring new places, constantly seeking fresh perspectives and stories beyond headlines.
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