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Equity Funds Dip, SIPs Surge: Retail Investors Rally!
18 Jan
Summary
- Equity mutual fund inflows decreased 11% last year, reaching ₹3.52 lakh crore.
- Retail investors are consistently setting new monthly records via SIPs.
- Analysts predict market volatility for the next 3-4 months due to global factors.
Inflows into equity mutual funds experienced an 11% decrease last year, totaling ₹3.52 lakh crore compared to ₹3.96 lakh crore in 2024. This decline occurred even as retail investors pushed Systematic Investment Plan (SIP) contributions to record levels, with December alone seeing ₹31,002 crore invested. These figures suggest a divergence in investment strategies.
Informed investors have been reducing their equity mutual fund holdings due to concerns over elevated market valuations and potential corporate earnings slowdowns. This caution is amplified by global uncertainties and a recent tightening of banking liquidity in early 2025, which also impacted household consumption and export-oriented sectors.
Despite short-term volatility anticipated over the next 3-4 months due to geopolitical factors, analysts see potential for an earnings recovery in 2026, driven by improving liquidity and policy support. India's attractiveness is further enhanced by a potential emergence from cyclical lows in growth and the rupee from a global investor perspective.
