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Indian investors are pulling back from SIPs due to market volatility, with the stoppage ratio at 109% in January 2025. Market expert advises continuing SIPs for long-term wealth.
Indian stock market is witnessing volatility with substantial fall and rise of the benchmark indices.
Indian investors seem to be pulling back from Systematic Investment Plans (SIPs) amidst market volatility. The SIP stoppage ratio, which compares discontinued or expired SIP accounts to new registrations, reached 109% in January 2025. Data from the Association of Mutual Funds in India (AMFI) reveals a net closure of 5.14 lakh SIPs exceeding new registrations for the month.
This trend is attributed to market corrections and recent negative returns, making investors wary. Benchmark indices have been on a rollercoaster ride, experiencing sharp falls and rises. Factors such as foreign institutional investors (FIIs) offloading holdings due to overvaluation concerns, escalating trade tensions, and a global economic slowdown have fueled pessimism, dragging down the market. Both the Nifty and Sensex have retreated substantially from their recent peaks.
Is it the rightful approach to close your SIPs when market is volatile and unpredictable? Let’s know what experts have a say on this.
Should You Stop Or Continue Your SIP In MFs Amid Market Volatility?
Continuation of SIP is a very important to a disciplined investment approach and key to long-term wealth creation for the investors, argued Krishna Rao, Managing Director & Co-Head – Equity Broking, JM Financial Services Ltd.
“Thus, irrespective of market volatility the investors should continue with SIPs as the focus remain on medium-to-long term returns rather than timing the markets,” he added.
Rao believed that SIPs could be gradually increased when markets are bearish and overall valuation seems attractive as it helps to generate market-beating returns over long-term.
Should Investor Shift To Safer Assets Or Stay Patient?
Rao believed that investor should increase share of large caps in their portfolio as valuation (one-year forward PE) of Nifty-50 at 18.5x (at 10% discount to long-term average of 20.5x) seems reasonable.
Higher allocation towards sectors which are available at discount to historical valuation should be the portfolio strategy, Rao said.
“Moreover, investors should add quality stocks which offer decent earnings growth visibility and are available at reasonable valuation or where there is limited scope of earnings downgrade/valuation de-rating from current levels.”
However, he cautioned that global trade wars, INR depreciation and high US bond yields would keep Indian equity markets volatile in the near-term.
Mr. Manish Goel, Founder and MD, Equentis Wealth Advisory Services said markets are entering a phase of renewed traction, driven by improving GDP growth, earnings recovery, and better liquidity conditions. While global trade remains volatile—with Trump’s tariff war reshaping economic dynamics—India’s resilience stands out. After a temporary slowdown, government spending and capex are back on track, setting the stage for stronger growth in the coming quarters.
“As liquidity conditions improve and investor confidence returns, we see a clear path for markets to comeback the 25,000–26,000 range over the next 2-3 Quarters,” Goel said.
Disclaimer: The views and investment tips by experts in this News18.com report are their own and not those of the website or its management. Users are advised to check with certified experts before taking any investment decisions.