Mutual fund managers have pumped in over Rs 600 crore into equities since the beginning of this month, taking the total to more than Rs 7,200 crore in the current fiscal so far.
This comes on the top of more than Rs 64,000 crore invested in the entire past fiscal.
Growing participation from retail investors, especially from small towns, and several measures taken by markets regulator Sebi led to robust inflows in equities, industry experts said.
The regulator has given extra incentives for those expanding into smaller cities.
Equities witnessed a net outflow of Rs 575 crore in April, while a net inflow of Rs 7,149 crore was seen in May and again a net inflow of Rs 634 crore was witnessed this month (till June 23) taking the total to Rs 6,208 crore, according to latest data with Sebi.
Smaller towns have contributed more than 40 per cent of inflows in equity schemes.
Meanwhile, the 30-share benchmark index Sensex has risen over four per cent in the ongoing financial year (2016-17) so far.
MFs are investment vehicles made up of a pool of funds collected from a large number of investors and invest in stocks, bonds and money market instruments, among others.