The nearly ₹2.97 lakh crore month-on-month swing was driven largely by liquidity-oriented categories, with liquid funds accounting for the bulk of the inflows.
Liquid funds received ₹1.19 lakh crore in July, compared with an outflow of ₹42,293.3 crore in June. Overnight funds recorded inflows of ₹40,413 crore, while money market funds saw inflows of ₹21,180 crore. Both categories had also recorded sizeable outflows in June.
Nehal Meshram, Senior Analyst at Morningstar Investment Research India, said the sharp rebound was primarily driven by large allocations to liquidity-oriented categories.
She said the flows suggested a return of corporate treasury and institutional surplus money at the beginning of the quarter, rather than a broad-based shift towards longer-duration fixed-income strategies.
Nitin Agrawal, CEO, Mutual Funds at InCred Money, also said the sharp reversal in debt flows should not be over-interpreted. He attributed much of the swing to treasury activity, with outflows seen around the quarter-end in June reversing at the beginning of the new quarter in July.
The flow pattern was more muted outside the liquidity segment. Ultra-short duration funds attracted ₹8,039 crore in July, while short-duration funds recorded inflows of ₹840 crore.
Corporate bond funds recorded an outflow of ₹784.7 crore in July, compared with an outflow of ₹7,557.3 crore in June. Long-duration funds saw an outflow of ₹618 crore, while dynamic bond funds recorded an outflow of ₹582 crore.Credit risk funds, however, continued to attract money, recording an inflow of ₹145 crore in July compared with ₹247.6 crore in June.
The July data highlights the sharp month-to-month swings in debt-fund flows during 2026. On a year-to-date basis, debt-oriented schemes recorded cumulative net inflows of ₹50,945 crore between January and July 2026, compared with ₹2.28 lakh crore during the corresponding period in 2025.
Meshram said the moderation in year-to-date flows reflected volatile movements between quarter-end outflows and quarter-beginning inflows, along with changing interest-rate expectations that have kept investors cautious about extending duration.
The July rebound was therefore concentrated largely in liquid and short-duration categories, while longer-duration and rate-sensitive debt funds continued to see mixed flows.
First Published: Aug 11, 2026 1:37 PM IST
