Mutual Funds Equity Purchases Falls to 3-Year Low in February

Mutual fund buying in domestic equities declined significantly in February, falling to ₹10,381 crore, the lowest level recorded in the past 3 years, as per news reports. 

The sharp drop came after a strong buying month in January, when fund houses had invested ₹42,355 crore in equities. 

Weak Inflows and Market Volatility Weigh on Purchases 

The slowdown in equity purchases coincided with softer inflows into equity mutual fund schemes. Net inflows into equity funds dropped to ₹24,029 crore in January, marking a 7-month low. 

Investor sentiment was impacted by weak near-term returns in equity schemes and rising geopolitical tensions, which pushed some investors toward safer alternatives such as gold exchange-traded funds. 

Systematic investment plan (SIP) inflows into active equity funds which had remained resilient through most of 2025 also saw a slight decline during the period. 

Fund Managers See Opportunities After Correction 

Despite the slowdown in purchases, some fund managers believe the recent market correction may create better entry opportunities in the coming months. 

“We have recently increased cash levels with a view to rebuilding equity exposure at lower levels,” Quant Mutual Fund said in its March equity outlook. 

“Through the recent period of correction and consolidation, India’s relative price-to-earnings (PE) multiples have realigned with historical averages and macroeconomic fundamentals. We believe the next phase of India’s bull-run will be supported by an improving earnings revision cycle following structural reforms,” it added. 

Read More: Axis AMC Names R Sivakumar as Chief Investment Officer! 

Conclusion 

Market views remain divided on the outlook for Indian equities. While some analysts see the recent volatility as a buying opportunity, others caution that geopolitical tensions and elevated energy prices could continue to weigh on investor sentiment in the near term. Meanwhile, increasing equity allocation by hybrid funds may offer partial support to equity markets as valuations become more attractive. 

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