Driven by buoyant SIP flows, equity mutual funds have attracted ₹12,546 crore in January, making it the highest net infusion in four months, despite volatility in stock markets.

This was way higher than ₹7,303 crore inflow seen in December, ₹2,258 crore in November and ₹9,390 crore in October. Prior to that, equity mutual funds witnessed flow to the tune of ₹14,100 crore in September.

This was also the 23rd straight month of inflows into equity-oriented mutual fund schemes, data with the Association of Mutual Funds in India (Amfi) showed on Thursday.

"Despite the volatility in stock markets, investors continue to repose faith in equity mutual funds, as evidenced by the ₹12,546 crore of net inflows in January, a 72 per cent rise on month-on-month basis," Gopal Kavalireddi, Head of Research at FYERS said.

Akhil Chaturvedi, Chief Business Officer, Motilal Oswal Asset Management Company said, the strong flows in January was supported by SIP or Systematic Investment Plan inflows, despite a volatile month, is sign of increasing maturity of investors to continue their allocations in equity mutual funds.

During the month, equity schemes have seen inflows in all the categories and smallcap schemes emerged as the most preferred category with a net inflow to the tune of ₹2,255 crore, followed by Midcap ( ₹1,962 crore), and Large & Midcap (₹1,902 crore).

As per the data, flows through SIP rose to ₹13,856 crore in January from ₹13,573 crore in December. This was the fourth consecutive month when SIP flows remained above the ₹13,000-crore mark.

The inflows into equity funds came in even as Foreign portfolio Investors (FPIs) remained net sellers for the month.

While FPIs selling came in largely owing to multiple factors like the discomfort around valuation, the movement of foreign investors into other emerging economies, and profit booking; domestic investors continued to invest in equity funds, Kavitha Krishnan, Senior Analyst – Manager Research at Morningstar India, said.

With the interest rate hike cycle still in progress, hybrid funds continue to find support, with a net flow of ₹4,492 crore in January, doubling down on the flows of last month. Multi-Asset and Arbitrage funds saw net flows of ₹2,182 crore and ₹2,055 crore respectively. Also, the index fund attracted ₹5,813 crore in the month.

However, debt-oriented mutual fund schemes continue to witness net outflow of ₹10,316 crore during the period, as compared to ₹21,947 crore in the preceding month, according to Amfi data.

Within the debt funds, liquid funds category has seen highest outflow at ₹5,042 crore, while money market funds has witnessed an inflow of ₹6,460 crore.

The mutual fund industry Assets Under Management (AUM) was marginally down to ₹39.62 lakh crore in January-end from ₹39.89 lakh crore in December-end. Of this, equity AUM stood at ₹15.06 lakh crore and debt AUM at ₹12.38 lakh crore.