Inflows into India’s small- and mid-cap equity mutual funds surged to record highs in April, data showed on Monday, on the back of resilient earnings and more attractive valuations after a recent correction.
Small-cap funds drew 65.62 billion rupees of inflows, while mid-cap funds attracted 68.86 billion rupees — record highs for both categories, according to data from the Association of Mutual Funds in India.
Large-cap funds, by contrast, lost some shine, with inflows dropping 15.3% to 25.25 billion rupees, underscoring a sharper hunt for growth and value beyond India’s biggest stocks.
Overall inflows cooled in April, slipping 5% to 384.4 billion rupees, while contributions through systematic investment plans (SIP) moderated marginally to 311.15 billion rupees from the record high levels hit in March.
“The slight moderation is mainly due to higher crude prices following the Iran war and fewer working days in April, but the broader inflow trend is likely to continue as investors focus on long-term prospects rather than short-term jitters,” said Venkat Chalasani, chief executive of AMFI.
The rush into broader-market funds helped fuel a sharp rebound in small- and mid-cap shares.
The Nifty Smallcap 100 and Nifty Midcap 100 jumped 18.4% and 13.6%, respectively, in April, outpacing gains of 7.5% in the Nifty 50 and 6.9% in the Sensex, as markets clawed back ground after March’s oil-driven selloff.
“Steady April-quarter earnings, cheaper valuations after the time correction since September 2024, investor preference for growth opportunities and thin foreign ownership have powered the outperformance in small- and mid-caps,” said Saurabh Jain, deputy vice president of equities at SMC Global.
“That trend could persist as foreign investors keep trimming Indian equities.”
Foreign portfolio investors, who have relatively higher exposure to large-caps than small- and mid-caps, have sold $22.17 billion of Indian stocks so far in 2026, already exceeding 2025’s record outflows of $18.91 billion.
Elsewhere, gold ETF inflows rose 34.2% to 30.40 billion rupees, snapping a three-month slide, while silver ETFs saw outflows of 126.7 billion rupees.
Record inflows into small- and mid-cap funds in April show investors are hungry for growth, but with crude prices rising after the Iran conflict, I wonder if this rally will hold.
Large-cap funds saw a 15.3% drop in inflows while small- and mid-caps hit records—clearly everyone’s chasing returns beyond the top stocks, just hope they’re not too late.
SIP contributions dipped slightly to 311 billion rupees from March’s record, but Venkat Chalasani’s right—long-term focus matters more than short-term noise like higher crude prices.
The war mentioned here involving India and US and Iran is significant. This development needs careful monitoring going forward.
68.86 billion rupees into mid-cap funds is insane. After the recent correction, valuations must look tempting, but I’m cautious about how much risk retail investors are taking on.
Interesting that overall inflows cooled 5% despite the small/mid-cap frenzy. Fewer working days and Iran war worries definitely played a part, but the SIP discipline is reassuring.
The financial aspect (15.3%) is noteworthy. The numbers tell an important story about the underlying trends.