Indian equity funds investing in small-cap stocks attracted record inflows in August, with investors favoring smaller companies whose months-long rally has defied broader weakness in the nation's equities. Small-cap funds received 79.7 billion rupees ($837 million), according to data from the Association of Mutual Funds in India. Overall, equity funds took in 293.3 billion rupees, supported by monthly recurring investment plans.

The surge highlights investor confidence in smaller firms amid a broader market downturn. Data indicates a shift in strategy, with capital rotating into segments showing resilience. The figures mark a significant milestone for the segment, reflecting sustained interest despite macroeconomic headwinds.