Mutual fund managers net purchased stocks worth close to Rs 10,000 crore in April, making it the highest investment in five months, on sustained participation by retail investors.
This comes on the top of over Rs 51,000 crore investment in stocks in the entire 2016-17 financial year.
Fund houses are upbeat over the industry's performance in the ongoing fiscal while expecting investment from new investors to fuel the growth of the sector.
As per data released by the Securities and Exchange Board of India (Sebi), mutual fund managers invested a net sum of Rs 9,918 crore in stock markets last month, much higher than the Rs 4,191 crore infused in March.
This was the highest infusion by fund managers since November 2016, when they had invested a net sum of Rs 13,775 crore in stock markets.
Apart from equities, fund managers invested a staggering Rs 58,000 crore in debt markets in April.
According to market experts, the mutual fund industry is at a take-off stage in terms of growth and Indian investors are warming up to investments in equity as an asset class.
"The positive net inflow in equities can be credited to maturity of retail investors," Bajaj Capital Chief Executive Rahul Parikh said.
"Indian investors have now eventually assimilated mutual funds and the credit goes to awareness programs and endeavours by regulators and Asset Management Companies (AMCs)," he added.
Kaustubh Belapurkar, Director Fund Research at Morningstar, said that flows into equity and balanced funds have been phenomenal since the market correction post demonetisation in November 2016.
"Fund managers over the last few months are effectively deploying these fresh inflows and also looking to reduce their cash levels by investing greater amounts into the equity markets," he added.
A mutual fund pools the assets of its investors and invests the money on their behalf. It provides diverse investment instruments like stocks and bonds without requiring investors to make separate purchases and trades.