Indian mutual funds tilt to debt as managers prepare for potential RBI easing

Indian mutual funds are rotating toward short- and medium-term debt, anticipating possible RBI rate cuts before Q1 2026. September flows indicate withdrawals of about ₹18,000 crore from small-cap funds and roughly ₹12,700 crore into dynamic bond and liquid schemes. Portfolio managers cite derisking amid equity volatility and a preference for duration strategies that could benefit from an eventual easing cycle.