New Delhi: The Indian stock market has displayed fantastic volatility in the last month due mainly to unusual sell-offs by overseas buyers in reaction to tariff threats from the previous U.S. president, Donald Trump. Such continued market fluctuations have left investors in significant debt, and Dalal Street reflects obvious declines. But on Tuesday, there was a slight rebound.
In the midst of this uncertainty, one thing is clear: an unprecedented number of investors have halted their Systematic Investment Plans (SIPs). According to recent statistics, around January 2025, approximately 6.1 million investors halted their SIPs, which is an astonishing 82.73% increase over the prior months. This increase represents the highest SIP cancellation rate in recent memory. On the other hand, 4.49 million SIP closures in December 2024 indicate a distinct rise in investor apprehensiveness.
On the whole, mutual funds have been viewed as a safer investing option than going direct to the stock market. But the current slump has hurt investors’ faith, especially in small- and mid-cap funds. The SIP stoppage ratio is up in January, which is indicative of the change in attitude.
Despite the general swings in the market, financial advisers are urging clients to maintain patience and stick to their long-term investment plans. WhiteOak Capital AMC chief Ashish Somaiyaa explained how, in the interview with the Economic Times, market volatility is beneficial for average returns in the longer term. While he appreciated the importance of timing, Somaiyaa took a strong stand for systematic investment plans (SIPs) as a consistent long-term approach because these help you accurately predict and understand the peaks and troughs of the market.
On similar lines, Edelweiss Mutual Fund MD and CEO Radhika Gupta said investments made during market corrections may reward investors well. She stressed that SIPs tend to work best over long periods, as historical experience indicates that remaining invested even during drawdowns tends to lead to strong recoveries. Gupta warned investors against halting SIPs in such unfortunate circumstances during the market fall, saying the practice would lead to missing opportunities to purchase units at slashed rates, resulting in reduced potential returns going ahead. “It’s important that your SIPs align with your long-term financial targets,” she advised clients.