Inflows into India's equity mutual funds shrank to a 10-month low in February as the benchmark index posting its longest falling streak in nearly three decades pushed away investors, data released on Wednesday showed.

The sharp decline was largely attributed to reduced inflows in mid and small-cap funds, which saw a drop to Rs 3,406 crore and Rs 3,722 crore in February.

In February, mutual fund net inflows dropped by 79% due to a 5% decline in benchmark indices Nifty 50 and BSE Sensex. Equity mutual fund inflows fell by 26%. Sectoral and thematic funds received the highest inflows,

Mutual fund inflows are expected to remain volatile due to market conditions, says InCred Equities, with medium-term prospects improving as retail participation grows.

Equity Mutual funds are beneficial for long-term financial goals, leveraging the compounding effect. Despite market volatility, they can offer opportunities to buy at lower prices

Equity mutual funds increase cash holdings amid market volatility, preparing to capitalize on emerging investment opportunities.