- विज्ञापन -
New Delhi: Let’s explore the current state of Systematic Investment Plans (SIPs) in India amidst market fluctuations. SIPs are investment mechanisms that allow individuals to contribute fixed amounts regularly to mutual funds. SIPs are a great investment option, promoting disciplined investing and mitigating the impact of market volatility through rupee cost averaging.
However, amid recent ups and downs in the stock market, it is necessary to understand whether investors will keep using Systematic Investment Plans (SIPs) to invest in mutual funds in the future or not.
Dip in SIPs
Let’s understand first why it is being said that now investors are losing their interest in SIPs. In February 2025, SIP contributions experienced a 6% drop, amounting to ₹264 billion. This decline is attributed to a slowdown in the four-year SIP growth trend, with new investors pulling back while seasoned investors remain committed.
Amid market volatility, investors are increasingly gravitating toward large-cap funds,which are perceived as more stable. In January 2025, inflows into large-cap mutual funds surged by 52.3% to ₹30.63 billion, while overall equity mutual fund inflows decreased by 3.6% from December 2024.
To enhance financial inclusion, especially in smaller towns, the Securities and Exchange Board of India (SEBI) is encouraging fund houses to introduce SIPs with monthly investments as low as ₹250. This initiative aims to make SIPs more accessible, given that a significant majority of the 225 million current SIP investors are from larger cities.
Effect of Market Instability on SIPs: While SIPs are designed to mitigate the effects of market volatility, the recent market fluctuations have led to a decrease in new SIP registrations. As per reports, In February 2025, SIP discontinuations surpassed new registrations, raising concerns about investor confidence.
Survival of SIPs amid fluctuations
As per report, SIPs won’t disappear. They’ve grown hugely—mutual fund accounts jumped from a few million to over 232 million since 2014, thanks to SIPs. Even with the slowdown, experts think it’s temporary. New investors might pull back, but seasoned ones are likely to keep going, knowing markets bounce back over time. The Reserve Bank of India (RBI) cutting interest rates could help the economy and markets recover, making SIPs attractive again.
Despite recent market volatility leading to a slight decline in SIP contributions and a shift towards large-cap funds, SIPs continue to be a favoured investment option for disciplined, long-term wealth creation.
Government initiatives to lower the entry barrier for SIPs aim to broaden participation, ensuring that investors across the country can benefit from this investment approach. Staying devoted to SIPs, even during market fluctuations, can be a wise strategy for achieving long-term financial goals.
