In March 2023, mutual funds in India made significant investments, deploying ₹80,000 crore amid a market correction exceeding 11%. This buying was prompted by aggressive foreign institutional investor (FII) outflows, attributed to the inverse correlation between Indian stocks and crude oil prices when exceeding the $90–100 per barrel range, alongside ongoing geopolitical tensions in the Gulf region. According to a report by ICICI Securities, assuming equity inflows into mutual funds remained consistent at around ₹25,000 crore, the cash reserves of active mutual funds are estimated to have fallen to about ₹1.3 lakh crore by the end of March. Should the Gulf crisis continue, these cash levels could drop further to ₹1 lakh crore, a 50% decrease from their peak of ₹2 lakh crore in April 2025, assuming no significant redemptions occur. Despite this deployment, the cash-to-assets under management (AUM) ratio for active equity mutual funds is expected to stabilize at around 3%, which is considered a normal liquidity level. Additionally, equity-oriented schemes saw net inflows of ₹26,000 crore in February 2026, raising their active equity AUM to ₹35.4 lakh crore before the March downturn. Systematic investment plan (SIP) flows, recorded at ₹29,800 crore in February, have begun to flatten due to increased market volatility, highlighting the growing dominance of domestic institutional investors in the Indian equity market.