Net inflows in equity mutual funds dipped 40% to ₹22,907 crore in May 2026 from the previous month, according to monthly data from Association of Mutual Funds of India (AMFI).

Inflows into equity mutual funds had already moderated ever since the beginning of the calendar year. The inflows moderated in January and February 2026, even before the Iran war. Investors had shown resilience despite lukewarm returns on their funds throughout 2025 with July 2025 inflows going as high as ₹42,702 crore. This momentum normalised in the subsequent months.

“The moderation in flows can largely be attributed to a combination of factors. Equity markets witnessed some recovery from the corrections seen earlier in the year, reducing the urgency among investors to deploy incremental capital during periods of weakness. Elevated valuations in certain pockets of the market, particularly within the broader market segments, may have also prompted some investors to adopt a more measured approach. In addition, the global backdrop remained uncertain, with concerns around the trajectory of global growth, evolving geopolitical developments, and the future path of interest rates continuing to influence investor sentiment. Against this backdrop, some degree of profit booking and temporary caution from lump-sum investors appears to have weighed on overall flows,” said Himanshu Srivastava, Principal, Manager Research, Morningstar Investment Research India.

The shift from equity to gold ETFs too faded with a net outflow of ₹725 crore. To be sure, multiple gold ETFs have halted large scale lumpsum subscriptions in light of an expected increase of increasing foreign exchange rate. 

“The reversal appears to have been driven by a combination of profit booking following the earlier rally in gold prices and a shift in investor risk appetite, with some rotation away from safe-haven assets,” said Nehal Meshram, Senior Analyst at Morningstar.

Investments through Systematic Investments Plan (SIP) also dipped to ₹30,954 crore in May 2026, from ₹31,115 crore in the month before. Number of contributing SIP accounts stayed at a little more than nine crore accounts for the second consecutive month. However, three lakh new SIPs were registered taking the number to 54 lakh accounts in May 2026. This comes after a slight dip to 53 lakh accounts in March 2026 from 53 lakh in February and 50 lakh in January. This means, the increase in May is merely compensating the dip in April 2026 making the effective addition just one lakh accounts.