Is it too soon to talk about redemptions?

Big picture While mutual fund redemptions haven't hit crisis levels, rising withdrawals are raising uncomfortable questions.

- Dipti Sharma

For years, Indian investors have defied market turbulence, treating every dip as a buying opportunity. But what happens when confidence starts to waver? With small-cap stocks in bear territory, midcaps on shaky ground, and the benchmark indices losing steam, cracks in investor confidence are beginning to show. And while mutual fund redemptions haven't hit crisis levels, rising withdrawals are raising uncomfortable questions: Is this just another routine correction, or are we at the tipping point of something bigger?

In January, mutual fund redemptions hit ₹10.3 trillion, lower than December's ₹13.2 trillion but still above October and November levels, according to Fisdom, a wealthtech startup.

However, a closer look at net flows suggests that money isn't necessarily fleeing the market. Barring December, when outflows hit ₹803.5 billion, net inflows were positive in the other three months—₹2.4 trillion in October, ₹602.9 billion in November and ₹1.87 trillion in January.