Smallcap and midcap funds now account for nearly 30% of active equity MF folios, as stock-market gains revive investor appetite for high-growth segments.
'Midcaps and smallcaps are the 'go-to segments' for retail investors.'
Small- and midcap stocks have delivered their biggest monthly rally in 12 years, but rising oil prices and global tensions could make the road ahead volatile.
'India is vulnerable to the West Asia crisis in three ways: Energy costs, the business Indian companies conduct in the region, and remittances from the Indian diaspora.'
Net inflows into smallcap funds surged 39 per cent M-o-M to a record Rs 7,768 crore, while midcap fund inflows rose marginally to Rs 6,192 crore.
New dematerialised (demat) account additions in India reached a six-month high in July, with 2.89 million new accounts opened, driven by a buoyant initial public offering (IPO) market and a broad-based rally in equities.
At Rs 4.07 trillion, gross inflows were just shy of the record Rs 4.34 trillion mobilised in H2 of 2024, making it the second half-yearly period in which inflows crossed Rs 4 trillion.
Liquidity stress in smallcap funds has fallen to its lowest level since February 2024, with the average time to liquidate 50% of portfolios dropping to 27 days in June from a peak of 44.2 days in January 2026, driven by a sharp recovery in smallcap stocks and increased trading volumes.
IT stocks had their worst first half fall in decades, with the Nifty IT index declining 31% in the January-June 2026 period, its biggest decline in the first six months of a calendar year since 2003.
Systematic Investment Plan (SIP) returns for smallcap and midcap mutual funds have seen a significant rebound, with average one-year SIP returns now at 19.1 per cent for smallcap funds and 13.5 per cent for midcap funds, according to Value Research data. This recovery is expected to revive momentum in the retail mutual fund industry, which had experienced a moderation in growth indicators.
Fund managers advise conservative investors to cap midcap exposure at 10 to 15 per cent of their equity portfolio.
Analysts predict that the Reserve Bank of India's interest rate decision, the evolving situation in West Asia involving the US-Iran conflict, and crude oil prices will be the primary factors influencing investor sentiment in the Indian stock market this week.
Foreign investors have largely been exiting one part of the market while domestic investors have been enthusiastically accumulating another, points out Debashis Basu.
rediffGURU Ulhas Joshi answers your mutual fund queries.
In April alone, they snapped up shares worth Rs 19,664 crore, recording their biggest buy since October 2024.
Accenture's revised annual revenue growth forecast and weaker-than-expected fourth-quarter guidance have sent shockwaves through the Indian IT sector, causing major IT stocks and the Nifty IT index to tumble significantly.
Indian benchmark indices Sensex and Nifty closed flat, paring early gains due to renewed hostilities between the US and Iran, which unsettled investor sentiment and led to profit booking in metal, oil & gas, and telecom shares.
Despite trailing the benchmark Nifty 50, small and midcap (SMID) stocks appear pricey on a 12-month forward price-to-earnings (P/E) basis. The Nifty trades at roughly 21x forward earnings, compared with around 28x for both the Nifty Smallcap 100 and Nifty Midcap 100 indices.
Investors now have 27 passive smallcap funds to choose from 17 index funds and 10 ETFs.
Most actively-managed equity mutual fund schemes outperformed their benchmarks despite volatility across domestic equity markets during the past year.
Life cycle funds may suit people who are starting their investing journey. They may suit those who do not want to monitor their investments frequently. Busy professionals, beginners and delegators, who lack the time, information or interest to manage asset allocation actively, may find these funds useful.
Despite geopolitical tensions and FII outflows, Indian small and midcap stocks have not only recovered losses but are also outperforming largecap indices, driven by attractive valuations, domestic institutional support, and a rebound in earnings.
Hospital stocks have emerged as a strong theme in 2026, outperforming benchmark indices due to robust earnings growth, improved occupancy, higher average revenue per occupied bed, and aggressive expansion plans by major chains.
'Stopping now would defeat the core purpose of an SIP, which is to average out the purchase cost over market cycles.'
Net investments into equity mutual fund schemes in India remained elevated at approximately 38,440 crore in April, despite a slight dip from March's high and a 3% month-on-month decline in Systematic Investment Plan (SIP) inflows.
Amidst a sharp run-up in gold and silver prices, investors are advised to rebalance their portfolios by booking partial profits in precious metals and reallocating to domestic equities and debt, according to financial experts.
As the rupee weakens, wealthy families are accelerating investments in global assets.
Indian IT stocks have seen a significant decline of up to 33 per cent year-to-date in 2026, largely due to artificial intelligence (AI) disrupting traditional outsourcing models, leading analysts to predict a challenging FY27 for the sector despite some cushion from rupee depreciation.
Indian defence stocks have seen an average year-on-year gain of 67 per cent, driven by renewed interest following 'Operation Sindoor' and a broader increase in global geopolitical tensions, with the combined market capitalisation of 18 firms increasing by approximately 2.3 trillion.
Indian investors have seen their wealth erode by a staggering Rs 16.77 lakh crore over four trading sessions, as the markets faced deep losses driven by elevated crude oil prices, geopolitical tensions, persistent foreign fund outflows, and a record-low rupee.
Mutual funds (MFs) have significantly increased their ownership across market segments, but the midcap space stands out with comparatively higher growth. Data reveals that the number of midcap companies with over a fifth of MF ownership has doubled from nine in March 2022 to 18 by March 2025. In contrast, largecap stocks saw only a marginal rise, from three to four such companies during the same period.
Is the current rally telegraphing a durable peace plan in West Asia, boosted by United States (US) President Donald Trump's incoherent and contradictory posts on social media?
Indian equities are experiencing their sharpest rebound in years, with the BSE 500 index rallying 12.1 per cent so far this month, echoing Covid-era recoveries despite ongoing geopolitical uncertainty and earnings risks.
Net inflows into equity mutual fund schemes moderated in FY26, falling by 27 per cent to about 3 trillion till February, as choppy markets and global uncertainties prompted investors to shift towards safer options like hybrid funds and gold ETFs.
Fixed deposits from nationalised banks delivered higher returns than equities, outperforming both inflation and stock market benchmarks.
Indian benchmark indices Sensex and Nifty experienced declines due to a sharp rally in crude oil prices, continuous foreign fund outflows, and geopolitical uncertainties. Regulatory developments in the banking sector, particularly the implementation of the Expected Credit Loss (ECL) framework, also contributed to the selling pressure.
Ask rediffGURU and PF, MF and insurance expert Purshotam Lal your mutual fund, insurance and personal finance-related questions.
Indian IT services companies are set to significantly increase their acquisition spending to $6.5-7 billion this year, up from $5 billion last year, as they seek to boost revenue and capabilities in areas like Cloud, data, enterprise platforms, and AI amidst a challenging economic environment.
Indian benchmark stock indices, Sensex and Nifty, closed nearly 1 per cent lower following the collapse of US-Iran negotiations, which heightened concerns of a prolonged conflict in West Asia and drove crude oil prices sharply higher.
New demat account additions in India reached an 11-month low in March, with only 2.15 million new accounts opened, significantly below the 12-month average. This slowdown is attributed to a sharp decline in equity markets, escalating West Asia tensions, and increased crude oil prices impacting India's economic outlook.
