Are mutual fund flows into equities at an inflexion point?

The recent deluge of net equity MF flows appears to be an outcome of a self-fulfilling virtuous cycle between inflating valuations and retail flows

The equity market rally thus far this financial year (H1FY18) in the absence of a meaningful pick-up in earnings has been fuelled by the gush of liquidity, especially by the mutual funds, which have invested around Rs 70,500 crore during this period. This is five times higher than what they had invested in the corresponding period last fiscal.
 
While most of this money has found its way into the mid-and the small-cap segments of the market, analysts have now started to worry about how long can this flow continue in the absence of a pick-up in corporate earnings and