Domestic investors keep mutual funds sector in high spirits as they try to fill gap left by FII outflows

“It's been such a welcome change to see because there was this big thing that when there is a sale in the stock markets, people run away. But that is not what Indian retail investors have been showcasing in the past two years, for sure,” said Mohanty.

There is a growing appetite for debt mutual funds the continuous rise in interest rates, as it is seen as a safer bet during a downturn.

“After two years of dull period in fixed income market where the MF industry, especially the top players, built a strong franchise on a fixed income, asset management capability, the last two years saw no action. This year, a continuous rise in interest rates and the expectation of a hike in interest is being factored into the bond curve. Clearly, there is a growing appetite for fixed income schemes,” said Balasubramanian.

Retail investors too have taken the SIP (systematic investment plan) route to invest in equities and this, again, is a sign of the uncertainty in the markets but shows the growing appetite in the country.

"MF campaigns played a crucial role in retaining retail investors during market volatility," Balasubramanian said.