Retail Resilience: Equity Mutual Funds Attract Rs 22,907 Crore In May Despite Nifty Declining

Inflows into equity mutual funds remained positive in May 2026, despite the Nifty 50 delivering a negative return of 2.36 per cent during the month, according to data from the Association of Mutual Funds in India (Amfi).

The robust inflows into the equity mutual fund category indicates that despite the macroeconomic challenges the market faces, retail investors remain resilient and chose to back the market.

According to the data released by Amfi for the month of May 2026, growth and equity-oriented schemes recorded a net inflow of Rs 22,907.77 crore. Gross fund mobilisation in the category stood strong at Rs 57,603.83 crore compared to gross redemptions and repurchases of Rs 34,696.05 crore, showing that retail sentiment remained unshakeable.

The net assets under management (AUM) of the equity and growth-oriented schemes grew to Rs 36,13,718.41 crore in May compared to Rs 35,74,352.13 crore in April. 

Decoding the Retail Resilience

The persistent inflow of retail money comes at a time when the broader markets have been declining amid geopolitical challenges and macroeconomic challenges. In the month of May, headwinds, such as sustained foreign institutional investor (FII) selling, volatile global crude oil prices and uncertainty surrounding corporate earnings growth amid sticky inflation pressured the stock market. The negative returns seen in May followed the 7.46 per cent gains made by the index in April.

Typically, in such circumstances, heightened global volatility and corrections in the stock market prompt retail participants to sell in panic and invest instead in safe haven assets. However, in the month of May, domestic investors bucked the trend and remained invested in the equity market. Notably, the inflows have remained positive in the first five months of 2026, irrespective of the Nifty 50 delivering negative or positive returns.

Thus, investors are increasingly seeing the falling index not as a signal to exit, but rather to accumulate shares. Additionally, the financialisation of household savings, easy digital onboarding through fintech platforms, and a lack of equally lucrative alternative assets have also created a backstop for the equity market.

Viraj Gandhi, CEO, SAMCO Mutual Fund, pointed out that the accumulation shows a non-reactive strategy among retail investors, as net inflows have remained positive despite the difference in Nifty returns.

“Contributions in systematic investment plans (SIPs) stood at Rs 30,954 crores in May 2026, marginally lower than April's Rs 31,115 crore, reflecting the structural nature of systematic investing. Total outstanding SIP accounts crossed 104.60 million with 5.40 million new SIPs registered in May alone. FY2026-27 has already collected Rs 62,069 crore in just two months, running ahead of FY2025-26. SIPs have clearly become India’s preferred vehicle for navigating volatility rather than reacting to it,” Gandhi said.

The behavioural shift for investors is led by discipline and long-term awareness. Speaking about the psychological and operational pillars which prevent investors from panic-selling, Gandhi explained that industry-wide efforts have institutionalised regular investing habits.

“Three factors stand out. First, the SIP mechanism itself, monthly auto-debits remove the emotional decision of “when to invest”. Second, investor maturity has demonstrably deepened; contributing SIP accounts stood at 96.40 million in May, effectively unchanged from April’s 96.50 million despite market softness. Third, years of market education by distributors and asset management companies (AMCs) have reinforced rupee cost averaging as a discipline. Retail investors increasingly treat corrections as an accumulation opportunity rather than an exit signal,” Gandhi said.

A look at the Amfi data further reveals that retail risk appetite has not diminished despite the Nifty sliding down in May. Investors are actively looking beyond large-cap indices to maximise their returns. Flexi-cap funds absorbed the highest net inflow at Rs 5,175.54 crore, followed closely by small-cap funds at Rs 4,945.57 crore and mid-cap funds at Rs 4,385.06 crore. 

Conversely, large-cap funds saw a relatively lower net inflow of Rs 1,592.93 crore. Gandhi added that the relatively lower inflows into large caps hint at a preference for greater return generating categories compared to a temporary trend. 

“The AUM share of large-caps has declined steadily from 18 per cent in March 2021 to just 11.40 per cent by March 2026, which is a structural, but not cyclical shift. Investors appear to be consciously seeking alpha beyond the index through exposure to mid-caps and small-caps, while flexi-caps continue to offer the comfort of manager-driven allocation across market caps. The lower inflows into large-caps in May versus the outperformance of small-caps reinforce this enduring preference,” Gandhi said.