Inflows into India's equity mutual funds moderated in July to 371.13 billion rupees ($4.42 billion), easing off record high levels hit in the previous month, data from the Association of Mutual Funds in India (AMFI) showed on Friday.
The sequential 9.4% drop in July from the previous month was due to profit booking at record high levels, according to two analysts.
Inflows in July are the second highest on record and positive for domestic equities from a liquidity perspective, said A Venkat Chalasani, chief executive of AMFI.
Inflows into large-cap mutual funds moderated 31% to 6.7 billion rupees.
Inflows into mid-caps fell 35% to 16.44 billion rupees, while small-cap equity mutual fund inflows were little changed at 21.09 billion rupees in July.
Multi-cap or diversified equity funds, which invest across different stocks to minimise risk of exposure to few stocks, reported a 50.5% jump in inflows to 70.85 billion rupees.
Sectoral or thematic funds saw the highest inflows among equity mutual fund schemes for the fourth straight month at 224.52 billion rupees, more than 50% of total inflows into equity-oriented schemes.
"Sectoral and thematic funds continued to remain the flavour of the season, led by two new fund offers in July which garnered inflows of 97.90 billion rupees," AMFI's Venkatesh said.
Equity mutual funds reported net inflows aggregating to 6.36 trillion rupees from domestic investors since February 2021, well above net foreign inflows of 657.26 billion rupees into mutual funds over the same period.
Indian mutual funds have reported inflows every month since February 2021.
The country's benchmark NSE Nifty 50 has risen about 72% over the last 41 months, helped by sustained mutual fund inflows, steady earnings and the fastest macroeconomic growth among emerging economies.
The stock benchmarks Nifty 50 and BSE Sensex rose about 4% and 3.5%, respectively in July, logging their second best month this year so far.
Contributions to systematic investment plans (SIPs) touched a record high of 233.22 billion rupees in July, hitting an all-time high for the 13th consecutive month.