More than ₹1 lakh crore has flowed into small- and mid-cap funds this calendar year already, underscoring investors’ growing willingness to tolerate volatility in pursuit of higher returns. Yet the market’s valuation equation is beginning to shift as largecaps are trading at a wider-than-usual discount to midcaps, while earnings growth expectations are narrowing the gap.
Data through September shows net inflows of about ₹1.07 lakh crore into mid- and small-cap funds in 2026. Mid-cap funds attracted ₹51,295 crore, while small-cap funds received ₹55,300 crore. Large-cap funds, by comparison, saw net inflows of ₹11,690 crore during the same period.
