Improved market sentiment helped mutual funds pick up shares worth more than Rs 4,000 crore in September, making it the fifth consecutive monthly inflow.
Besides, they pumped in a staggering over Rs 23,000 crore in the debt market during the period.
The inflow in equities during the month followed net investment of close to Rs 6,000 crore in August, Rs 5,000 crore in July, Rs 3,340 crore in June and Rs 105 crore in May.
Prior to that, fund houses have been net sellers in the equity market since September last year, while they were net buyers of shares to the tune of Rs 1,607 crore in August 2013.
As per the latest data compiled by market regulator Sebi, Mutual Funds (MFs) purchased shares worth Rs 4,171 crore last month.
Industry experts attributed the inflows in equities to improvement in market sentiments, primarily due to the new government's reforms agenda.
Besides, retail participation in equity schemes has increased significantly in the last few months.
"The money in equities has been coming in the past few months and mostly in the second half of May after the General Election results," said a market expert.
Mutual funds collect money from investors and buy stocks, including IPOs (primary market) and bonds.
In the first eight months of 2014, MFs purchased shares worth over Rs 8,000 crore, while they pumped in a staggering Rs 4.6 lakh crore in the debt market.
MFs offloaded shares worth Rs 14,208 crore last fiscal, lower than Rs 22,749 crore offloaded in 2012-13.
The financial year ended March 31, 2014 also marked the fifth consecutive year of net outflows by mutual funds in the equities after pumping in a net amount of Rs 6,985 crore in the share market in 2008-09.