Equity Funds Hit the Brakes...What's Happening in the Market?

Investor sentiment in the domestic equity market weakened amid the West Asia crisis, rising crude oil, fertilizer, and commodity prices, and continued foreign fund outflows. According to data released by the Association of Mutual Funds in India, net inflows into equity mutual funds fell to a one year low of ₹22,908 crore in May 2026, compared to ₹38,440 crore in April, marking a decline of nearly 40%.

Systematic Investment Plan (SIP) contributions also witnessed a decline. Investors invested ₹30,954 crore through SIPs in May, lower than ₹31,115 crore in April and ₹32,087 crore in March. The slowdown reflects growing caution among investors amid market volatility and global uncertainties.

Gold Exchange Traded Funds (Gold ETFs) also saw outflows as gold prices softened. Investors withdrew a net ₹725 crore from Gold ETFs in May, the first monthly outflow since April 2025. In comparison, Gold ETFs received ₹3,040 crore in April, ₹2,266 crore in March, ₹5,255 crore in February, and a record ₹24,040 crore in January. Overall, Gold ETFs have attracted nearly ₹70,000 crore since May 2025.