PMS Flows See Steepest Monthly Fall of FY26 as HNIs Turn Cautious; Derivatives Hit Hardest: PL Capital

Mumbai | November 24 – India’s Portfolio Management Services (PMS) industry recorded its sharpest monthly decline of FY26 in September, with net inflows plunging 92% to just ₹1,139 crore, compared with ₹14,789 crore in August. The downturn came even as total PMS assets under management (AUM) rose to a fresh peak, driven primarily by mark-to-market gains rather than genuine investor inflows highlighting the widening disconnect between asset growth and actual participation.

Industry data shows that gross inflows of ₹30,351 crore during September were heavily reliant on EPFO-linked mandates, which contributed ₹8,449 crore — nearly 28% of the month’s inflows. Meanwhile, non-EPFO AUM contracted 1.9%, erasing close to ₹21,000 crore. This skew underscores how statutory and institutional flows supported overall numbers even as high-net-worth investors (HNIs) pared exposure.

Discretionary PMS Suffers the Most as Risk Appetite Weakens

Discretionary PMS, the clearest gauge of HNI sentiment saw a sharp deterioration. Inflows declined from ₹33,730 crore in August to ₹19,290 crore in September, while redemptions surged to ₹16,500 crore. This led to the largest discretionary net outflow of FY26, reflecting widespread profit-booking and a shift away from equity-heavy and high-beta strategies.

Non-discretionary PMS flows, usually steadier because of corporate and treasury mandates, also slowed. Net inflows fell to ₹2,137 crore from more than ₹3,200 crore in the previous month.

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Derivatives AUM Sees the Deepest Fall of All Segments

The risk-off sentiment was most visible in derivatives PMS strategies. Derivatives AUM plunged 25.6% month-on-month, the steepest drop across all asset classes as investors unwound leveraged, arbitrage and long-short exposures.

Equity PMS AUM rose modestly by 2.5%, but this increase was almost entirely the result of price appreciation rather than incremental flows. Mutual fund allocations increased 2.8%, while pure-debt PMS rose by only 0.6%.

Corporate PMS AUM registered a rare 6% decline, underscoring the extent of de-risking among institutional investors. Non-resident PMS AUM rose 3% after August’s fall, partially cushioning domestic weakness.

Client Additions Slow, Advisory Mandates Decline

PMS platforms added 3,490 new clients in September, taking the total investor base to 2.1 lakh. However, client additions grew at just 1.4% for the month significantly lower than the 2–3% trajectory seen earlier in FY26.

Discretionary client numbers remain up 15% year-on-year, though momentum has moderated, while advisory PMS accounts dropped 15% year-on-year.

The divergence between rising AUM and sharply slowing flows signals that September’s PMS strength was largely optical. With HNIs turning cautious, discretionary inflows shrinking, and derivatives AUM collapsing, PMS flows may remain subdued until market volatility eases and earnings visibility improves.