 "Mutual Funds buy shares worth Rs 5,000 cr in July")
This also marks the third consecutive monthly inflow.
Besides, MFs pumped in a staggering Rs 19,000 crore in the debt market during the period.
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The inflow in equities last month followed net investment of 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, 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, MFs purchased shares worth Rs 5,064 crore last month.
This was the highest monthly inflow since January 2008, when they had invested Rs 7,703 crore in stock markets.
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 two months and mostly in the second half of May after the General election results," said a market expert.
The buying of shares in July coincided with a rise of 2 per cent in the BSE's benchmark Sensex.
Mutual funds collect money from investors and buy stocks, including IPOs (primary market) and bonds.
In the first seven months of 2014, MFs offloaded shares worth over Rs 1,900 crore, while they pumped in a staggering Rs 3.94 lakh crore in the debt market.
MFs offloaded shares worth Rs 14,208 crore last fiscal, lower than the 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.