According to Sanjay Agarwal, Senior Director at CareEdge Ratings, the weaker equity inflows in May “could be attributed to near-term caution among investors amid significant market volatility”.

With global crude oil prices remaining high around the $100 per barrel mark and the rupee nearly breaching 97-per-dollar in May, benchmark stock indices have been under intense pressure. In May, the Nifty fell 1.9%, while the Sensex declined by 2.9%, as Foreign Portfolio Investors (FPIs) net sold Rs 32,963 crore worth of Indian shares.

According to experts, SIP investments staying around Rs 30,000 crore is a sign that “retail India is not running” but “staying, averaging, and compounding”, said Suranjana Borthakur, head of distribution and strategic alliances at Mirae Asset Investment Managers, adding that mid and small cap holding their ground suggests the SIP book is “sticky” and it is lump sum investments that have moderated.

The huge net outflow of near a lakh crore from debt schemes – after an inflow of Rs 2.47 lakh crore in April – is not seen as a “structural retreat from fixed income” but due to redemptions in liquid, overnight, and money market funds which typically move with corporate treasury cycles and tax payment schedules, not investor sentiment, said Nitin Agrawal, CEO of mutual funds at InCred Money.

However, the subdued market sentiment was also reflected in the new fund offers, with only 13 new funds being launched last month.

Flows into gold exchange-traded funds (ETFs), meanwhile, turned negative with an outflow of Rs 725 crore compared to inflows of Rs 3,040 crore in April. Money invested in gold ETFs has fallen sharply after January saw it exceed inflows in equity MFs for the first time. May’s net outflow from gold ETFs is the first such outflow since April 2025.

“This is not a bearish signal on gold; it reflects profit-booking after a sharp price run-up. The structural case for a measured gold allocation in retail portfolios remains intact,” said Agrawal of InCred.

While the precious metal remains an effective avenue to diversify portfolios, the trend of falling flows into gold ETFs could be indicative of investors not looking to make outsized gains in the short-term. “With gold prices touching record highs, the government’s request to not purchase gold, and some AMCs stopping inflows in ETFs, investors seem to be taking a more practical view. After a sharp rally, future returns may not look as attractive as they did over the past year,” said Feroze Azeez, joint CEO at Anand Rathi Wealth.

In recent days, several mutual fund houses have suspended fresh subscriptions into their gold ETFs and fund of funds for large amounts in excess of Rs 25 crore. As MFs need to import gold to back investments in these ETFs, these investments exert a drain on the country’s trade deficit and weaken the currency. In 2025-26, India’s gold import bill hit a record high of $72 billion.