Equity net fund flows rose by 11% in March, reaching Rs 46,501 crore from Rs 41,934 crore in February, as per a report by Vallum Capital. The report highlighted a significant shift in total net asset flows, with investors moving towards equities while pulling back from money-market and fixed-income funds.
Indian equities experienced a notable rebound, attracting Rs 59,629 crore in inflows during March. Small-caps surged by 8.1%, mid-caps by 6.9%, and large-caps by 4.8% on a monthly basis. Despite this, year-to-date returns across the board remained negative.
In contrast, money-market net fund flows plummeted from Rs 42,800 crore in February to Rs -1,94,775 crore in March, while fixed-income outflows widened from Rs -16,919 crore to Rs -76,354 crore. This shift indicated redemption pressure or sensitivity to interest rates.
Commodities saw positive but subdued inflows, signaling waning investor interest as momentum in precious metals stabilized. The total net asset-level flows reversed from Rs 73,589 crore in February to Rs -220,797 crore in March, primarily due to the substantial money-market outflow.
According to the report, the global trend reflects a weakening US dollar and a shift away from American exceptionalism. Thematic ETFs focused on semiconductors and AI infrastructure emerged as clear winners globally. Non-US equity, commodities, and domestic capex themes have been outperforming, with gold and silver showing consistent demand.
Investors are adjusting their positions accordingly, with money flowing into safety through large-cap funds that received Rs 28,558 crore in March inflows, marking a significant increase from February. Flexi-cap and mid-cap categories also saw steady additions, while arbitrage funds and dynamic strategies experienced capital outflows.
