Mutual Funds Drive 65 Per Cent Of DII Inflows Into Stock Market In FY26 YTD

In November 2025, domestic institutional investors (DIIs) invested Rs 77.10 lakh crore in equities, marking their 29th consecutive month of net buying. Out of this, mutual funds invested Rs 43.50 lakh crore ($4.90 billion) in equities, nearly doubling on a month-on-month (m-o-m) basis amid a recovery in market sentiment. With this, cumulative equity inflows by domestic mutual funds in FY26TD (till December 8, 2028) rose to Rs 3.60 lakh crore ($39.50 billion), while the total DII inflows for the same time period stood at Rs 5.50 lakh crore ($ 63.30 billion).

These sustained investments were largely contributed by healthy investments through systematic investment plans (SIPs), which continued to provide predictable and stable inflows into equity markets. According to the data from the Association of Mutual Funds in India (Amfi), mutual funds have collected a total of Rs 2.56 lakh crore through SIPs in FY26 (till December 2025).

However, in contrast to their strong equity buying, domestic mutual funds remained net sellers in debt. In November, domestic mutual funds recorded net debt outflows of Rs 72.20 lakh crore ($8.10 billion), a sharp jump from the Rs 6.40 lakh crore outflow seen in October 2025. This marked one of the highest monthly outflows from debt funds. On a cumulative basis, domestic mutual funds have seen net outflows of Rs 3.70 lakh crore ($41.10 billion) from debt in FY26TD (till December 8, 2025).

Experts pin the calendar year end outflows to liquidity requirements by institutional investors.

Says Himanshu Srivastava, principal research, Morningstar Investment Research India, “The sharp increase in redemptions towards the end of calendar year was primarily driven by heavy withdrawals from liquid, money market, and ultra-short duration funds, as corporate and institutional investors drew down surplus cash for quarter- and year-end requirements, including advance tax payments, balance-sheet adjustments, and working-capital needs.”

He added that such seasonal outflows were typical in the December quarter and did not indicate structural weakness in debt fund demand.

Incidentally, the Market Pulse Report by the NSE also states evolving interest rate dynamics and broader macroeconomic conditions, as the reason for a preference for lower duration and higher liquidity by debt investors.

Overall, the data highlights a clear divergence in domestic investment behaviour – strong, mutual fund-led equity inflows on one hand, and continued caution in debt on the other, thereby underscoring the changing risk preferences of domestic investors in the current market environment.