Net inflows into equity mutual funds fell 14 % over the month to Rs 25,082 crore in March, according to data released by the Association of Mutual Funds of India (AMFI). However, inflows into open-ended equity funds have stayed in the positive zone for the 49th month in a row.The fall in inflows has come despite a steady recovery in local stock markets, reflecting a slightly choppy underlying scenario and global trade and geopolitical worries.

In the equity fund category, the drop in inflows in March was primarily on the back of a fall in net investments into Sectoral/Thematic Funds. Net inflows in this category tumbled 97% from Rs 5,711.58 crore in February to Rs 170 crore in March. However, inflows into smallcap and midcap funds came in on the higher side. In March, net investments into smallcap funds rose 10 % on month to Rs 4,092.12 crore, while inflows into midcap funds edged up 0.9% to Rs 3,439 crore. The inflows into largecapmutual funds fell 13.5% to Rs 2,479 crore though.

Meanwhile, AMFI data showed that debt mutual funds saw net staggering outflows of Rs 2.03 lakh crore in March against net outflows of Rs 6,525.56 crore in February. This was mostly due to increased corporate redemptions to meet quarter and financial year-end advance tax obligations. In debt funds, category-wise analysis showed that short-term liquid funds saw the highest net outflows at Rs 1,33,034 crore, followed by net selling of Rs 30,015.80 crore in the Overnight Fund category. All the debt fund categories saw outflows during March.

After 10 consecutive months of net inflows, Gold ETFs witnessed outflow in March. The Gold EFTs, saw net outflows of Rs 77.21 crore compared to inflows of Rs 1,979 crore in February. On a broad basis, Indian mutual fund industry saw net outflows of Rs 1.64 lakh crore in March on account of selling in debt mutual funds.

A total of 30 schemes were launched in the month of March 2025 all open-ended and across categories, raising a total of Rs 4,085 crore.

The monthly inflow through the Systematic Investment Plan (SIP) route into mutual funds marginally fell to a four-month low of Rs 25,926 crore in March, despite equity markets staging a recovery, according to data from AMFI.

SEBI announces change in cut-off timings to determine net asset value

Markets regulator SEBI announced a change in cut-off timings to determine the net asset value (NAV) with respect to repurchase or redemptions of units in overnight schemes of mutual funds.The changes will allow time for stock brokers (SBs), or clearing members (CMs) to un-pledge units of Mutual Fund Overnight Schemes (MFOS) and place redemption requests with mutual funds, after the close of market hours.

For applications received up to 3 pm, the closing NAV of day immediately preceding the next business day will be applicable. For applications received after 3 pm, the closing NAV of the next business day will be applicable, Sebi said in its circular.However, in case application is received through online mode, the cut-off timing of 7 pm will be applicable for overnight fund schemes, it added.

The new timings will become effective from June 1.Investment in Mutual Fund Overnight Schemes (MFOS) is a new avenue made available to stock brokers or clearing members to deploy client funds and ensures minimal risk transformation of client funds because of overnight tenure and exposure to only risk-free government securities.

SBs/CMs ensure that client funds are invested only in such MFOS that deploy funds into risk-free government bond overnight repo markets and overnight Tri-party Repo Dealing and Settlement (TREPS).

Further, such MFOS units are required to be in demat form, and must necessarily be pledged with a clearing corporation at all times.

Total AUM up around 21% on year

Assets managed by the Indian mutual fund industry has increased from Rs. 55.01 lakh crore in Mar 2024 to Rs. 66.70 lakh crore in Mar 2025, representing 21.26% increase in assets over March 2024. The proportionate share of equity-oriented schemes is now 59.2% of the industry assets in March 2025,up from 57.8% in March 2024. The proportionate share of debt-oriented schemes is 15.1% of industry assets in Mar 2025, down from 16.3% in Mar 2024. ETF market share is 12.6% in March 2025, down from 12.9% in Mar 2024. The value of assets held by individualinvestors in mutual funds increasedfrom Rs.33.31 lac crore in March 2024 toRs. 40.31 lakh crore in Mar 2025, anincrease of 21.02%.

Outlook:

The domestic stock markets saw a sustained recovery in April 2025 but overall sentiments remained volatile. Initially, the US led tariff concerns weighed on the market action before the focus shifted to the ongoing earnings season and economic cues. In first week of May, rising escalation between India and Pakistan and a warlike situation on the borders dominated the proceedings. This can continue to weigh on inflows in local equity funds. Net inflows into equity mutual funds tumbled 14% on month in March with a drop in Inflows into largecap funds reflecting an overall cautious mood.