India's Mutual Fund Inflows Surging Despite Market Challenges

India's mutual fund industry is on the brink of witnessing strong financial inflows amounting to USD 40-45 billion in the fiscal year 2025-26, primarily driven by sustained Systematic Investment Plan (SIP) contributions, according to a report by Bernstein.

While projected inflows may slightly trail the record USD 55 billion from FY25, they remain considerably above the USD 30 billion recorded in FY24 and extend beyond long-term averages. The report emphasizes that retail investors continue their steady SIP contributions, showing resilience even through market downturns.

Despite weaker month-on-month inflows during FY25's fourth quarter, the overall inflows outperformed expectations, with some lump-sum contributions anticipated in FY26's latter half. The enduring trend of consistent retail investments is expected to mitigate business cyclicality and potentially boost asset management companies' valuations.

(With inputs from agencies.)