6-Month Low: Mutual Fund Equity Buying Slips to ₹17,778 Crore in October

In October 2025, mutual fund equity deployment hit a 6-month low at ₹17,778 crore, reflecting a slowdown in fresh inflows into equity schemes. 

The decline comes amid rising market valuations and increased profit booking, with fund managers adopting a more cautious approach following a robust market recovery.

Equity Deployment Falls Sharply in October

Data from the Securities and Exchange Board of India (Sebi) revealed that mutual funds invested a net ₹17,778 crore in equities during October, down sharply from ₹46,442 crore in September and ₹70,534 crore in August. This represents a significant moderation in equity exposure, signalling investor caution as markets approach record levels.

Impact of Rising Valuations and Profit Booking

The drop in equity buying is largely attributed to profit booking and concerns over stretched valuations. With stock prices nearing new highs, fund managers appear to have reduced aggressive deployment, preferring to rebalance portfolios and lock in gains. The move indicates a shift towards capital preservation after months of strong inflows.

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Moderation in Inflows into Equity Schemes

Alongside reduced market deployment, net inflows into equity mutual fund schemes are estimated to have moderated in October. This trend reflects investor prudence amid market volatility and anticipation of potential corrections. Despite the slowdown, mutual funds continue to maintain a positive long-term outlook on equities, driven by domestic growth and retail participation.

Conclusion

The 6-month low in mutual fund equity deployment at ₹17,778 crore highlights a period of caution for fund managers amid high valuations and profit-taking. While short-term inflows have softened, the broader sentiment remains constructive, with mutual funds expected to re-enter aggressively once valuations turn favourable.

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