Indian equity mutual funds posted their first negative one-year rolling returns in over six years as mid-cap and small-cap underperformance dented investor sentiment. Average one-year return across 180 equity schemes fell –0.8% in September 2025. Net inflows slowed to ₹30,400 crore versus ₹37,100 crore in August. Fund managers attribute weakness to valuation pressure in defence and infra themes and expect recovery as corporate earnings strengthen in Q3 FY26.