Equity mutual fund inflows may drop 18% in October as midcap and hybrid funds lose momentum: Nomura

Net equity inflows into Indian mutual funds are estimated to have declined 18% month-on-month to Rs 34,600 crore in October 2026, from Rs 42,300 crore in September, as investments in mid-cap and hybrid fund categories slowed, according to a report by Nomura.

However, small-cap funds are expected to remain relatively resilient, while large-cap and mid-cap funds are likely to be the biggest contributors to overall inflows, the report said.

The estimated October inflows would take the average monthly equity flow for FY27 so far to Rs 36,300 crore, compared with Rs 37,900 crore in FY26.


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Nomura's estimates cover the top 15 equity and hybrid mutual fund categories, accounting for around 99% of total equity inflows. The calculations exclude arbitrage flows to capture directional equity investments and separate actual flows from changes in assets under management (AUM) caused by market movements.

The report said that, “ Our methodology covers the top-15 equity and hybrid scheme categories, accounting for 99% of total equity inflows, spanning pure equity and hybrid schemes, while excluding arbitrage flows to reflect genuine directional equity flows.”

The large and mid-cap category is expected to attract Rs 8,800 crore in October, accounting for 26% of total estimated flows. This is likely to be led by significant inflows of around Rs 4,600 crore into DSP's unlisted large and mid-cap scheme, Nomura said.

Small-cap funds are estimated to attract Rs 7,900 crore, accounting for 23% of total inflows. The category is expected to remain a relatively strong contributor despite the overall moderation in equity mutual fund investments.

Mid-cap fund inflows, however, are estimated to decline to Rs 5,500 crore in October from Rs 7,800 crore in September. Their share of total flows is expected to stand at 16%.

Flexi-cap funds are estimated to attract Rs 5,200 crore, or 15% of total flows. Large-cap funds are expected to see inflows of Rs 800 crore, broadly stable compared with Rs 900 crore in September. Multi-cap fund inflows are estimated at Rs 3,200 crore, down from Rs 3,900 crore in the previous month.

Nomura's estimates cover the top 15 equity and hybrid mutual fund categories, which account for around 99% of total equity inflows. The calculations exclude arbitrage flows to capture directional equity investments and distinguish actual flows from changes in AUM driven by market movements.

The report said, “Our methodology covers the top-15 equity and hybrid scheme categories, accounting for 99% of total equity inflows, spanning pure equity and hybrid schemes, while excluding arbitrage flows to reflect genuine directional equity flows.”

The large and mid-cap category is expected to attract Rs 8,800 crore in October, accounting for 26% of total estimated flows. This is likely to be led by significant inflows of around Rs 4,600 crore into DSP's unlisted large and mid-cap scheme, Nomura said.

Small-cap funds are estimated to attract Rs 7,900 crore, accounting for 23% of total inflows. The category is expected to remain a relatively strong contributor despite the overall moderation in equity mutual fund investments.

Mid-cap fund inflows, however, are estimated to decline to Rs 5,500 crore in October from Rs 7,800 crore in September. Their share of total flows is expected to stand at 16%.

Flexi-cap funds are estimated to attract Rs 5,200 crore, or 15% of total flows. Large-cap funds are expected to see inflows of Rs 800 crore, broadly stable compared with Rs 900 crore in September. Multi-cap fund inflows are estimated at Rs 3,200 crore, down from Rs 3,900 crore in the previous month.

The slowdown is also visible across hybrid mutual fund categories. Inflows into aggressive hybrid and balanced hybrid funds are estimated to moderate sharply to Rs 300 crore in October from Rs 2,200 crore in September.

Multi-asset allocation funds are expected to attract Rs 1,600 crore, compared with Rs 3,700 crore in the previous month. Balanced advantage funds are likely to continue witnessing outflows, estimated at Rs 800 crore against Rs 900 crore in September.

AMC-wise inflow trends

Among AMCs, Nippon AMC's estimated share of equity flows stood at 7.3% in October, in line with its AUM market share of 7.3%, according to Nomura.

ICICI Prudential AMC's estimated share of equity flows was 2.8%, significantly below its AUM share of 13.8%. Its average flow share over the past three months stood at 5.5%, or 7.9 percentage points below its AUM share.

Nomura attributed the weaker flows to moderation across the fund house's flexi-cap, large-cap, large and mid-cap, and value fund categories.

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HDFC AMC's estimated share of equity flows stood at 6.8% in October, compared with 7.1% in September, against an AUM share of 12.3%. The brokerage attributed the underperformance to continued outflows from balanced advantage and aggressive hybrid funds.

SBI AMC's estimated share of equity flows also weakened to 4% in October from 7.7% in September. In contrast, Aditya Birla Sun Life AMC's share of equity flows improved to 1.5% in October from 1.3% in September. Several schemes that had previously witnessed outflows turned into inflow contributors, Nomura noted.

Which AMCs does Nomura prefer?

Within its coverage universe, Nomura prefers Aditya Birla Sun Life AMC as a turnaround story, followed by Nippon AMC, citing its consistent gains in AUM market share. The brokerage also likes ICICI Prudential AMC for its long-term growth prospects and superior product suite, while favouring HDFC AMC for its benign valuation.

Its preferred stock order is Aditya Birla Sun Life AMC, Nippon AMC, ICICI Prudential AMC, HDFC AMC and SBI Funds Management.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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