Mutual funds play a pivotal role in modern financial systems, offering investors diversified portfolios and professional management. Net Asset Value (NAV) serves as a key performance metric, reflecting fund valuation and investor confidence. This study examines the relationship between mutual fund flows, representing investor sentiments, and the magnitude of NAV corrections, which often mirror market responses to inflows and outflows. Using a comprehensive dataset of fund performance across categories, statistical and econometric techniques such as correlation analysis, regression modeling, and time-series analysis are employed to quantify this relationship. The findings reveal a significant positive relationship between fund flows and NAV corrections, with larger outflows associated with steeper NAV declines. Time-lagged effects indicate that changes in fund flows impact NAV corrections over a 2–3 week period. These insights offer valuable implications for fund managers, policymakers, and investors, highlighting the importance of fund flows as a predictive tool for market behavior and aiding in strategic decision-making.