In January, India's gold ETF net inflow reached 240.4 billion rupees, surpassing the stock market for the first time in history

In January, India's capital allocation experienced a rare turning point, with gold ETFs seeing record net inflows in a single month, surpassing stock funds for the first time, highlighting the rising market investment enthusiasm against the backdrop of new highs in gold prices.

According to Bloomberg, the Association of Mutual Funds in India reported on Tuesday that net inflows into gold exchange-traded funds (ETFs) rose to 240.4 billion rupees (approximately $2.65 billion) in January, slightly exceeding the net inflow of 240.3 billion rupees for stock funds.

This "cross" occurred after gold prices reached record highs driven by geopolitical and monetary-related risks. Although gold prices fell back last week, there was no significant withdrawal of funds, indicating the resilience of market demand for gold.

Meanwhile, stock funds did not experience a significant outflow. Data shows that net inflows into stock funds have been positive for the 59th consecutive month, with systematic investment plans still providing a stable source of funding for the stock market, even as the Nifty 50 index underperformed its peers in 2025.

Rare Capital Cross, Gold Receives Strong Endorsement from Local Investors

In absolute terms, the net inflow of gold ETFs and stock funds in January was nearly equal, but gold edged ahead by 0.1 billion rupees, with gold ETF net inflows setting a new record.

This result indicates that, at least for that month, local Indian investors' willingness to increase their allocation to gold has risen to a level that can "compete" with equity assets.

For the market, such changes in capital structure often reflect risk preferences rather than short-term price fluctuations. The continued attraction of funds to gold after its price surge indicates that some investors place greater emphasis on its defensive attributes.

Global Capital Echoes, Gold ETF Holdings Approach Three-Year Highs

The changes in India are not isolated events. Bloomberg reports that global gold ETF holdings remain close to three-year highs, even as gold prices corrected last week, with holdings still maintaining a high range.

Bloomberg noted that the factors supporting this round of gold strength include heightened geopolitical risks and weakened confidence in sovereign bonds and currencies. As long as these driving factors persist, the capital stickiness of gold ETFs may be maintained, thereby supporting gold prices.

Cultural Attributes Combined with External Risks Enhance India's Gold Demand Resilience

In India, global risk factors are compounded by gold's deep cultural connections locally, providing additional support for capital inflows. This makes gold not only a choice for allocation under macro uncertainty but also more likely to form sustained local demand.

Therefore, even in an environment where prices are high and short-term volatility is increasing, funds may still choose to continue participating through ETFs, rather than waiting for a pullback to re-enter.

Stock Market Funds Remain Stable, Systematic Investment Funds Hedge Against Volatility and Relative Weakness

Despite being surpassed by gold in January, the inflow of funds into stock funds remains resilient, achieving net inflows for 59 consecutive months. Data shows that systematic investment plans help maintain a stable rhythm of funds, reducing the impact of market volatility on subscription behavior.

Bloomberg stated that the continued inflow of funds occurs in the context of the Nifty 50 index underperforming global peers in 2025, indicating that some investors' participation in Indian equity assets is becoming more long-term and institutionalized In the short term, the "dual capital absorption" pattern of gold and equities may continue to serve as an important window for observing Indian residents' risk appetite and global risk pricing