THE SAHI QUESTION: TO SIP, OR TO STOP SIP

The market downtrend combined with a high SIP stoppage ratio has left many mutual fund investors in a quandary on whether they should continue their SIPs or not. We tell you when it makes sense to stop SIPs

- Ayush Khar

In the last five years, systematic investment plans (SIPs) have emerged as a key driver of growth in mutual funds, its value more than tripling from ₹8,055 crore in March 2019 to ₹25,999 crore in February 2025, according to data from the Association of Mutual Funds in India (Amfi). But data also shows that the trend seems to have reversed in the last six months, along with the market movement.

While the number of SIPs discontinued has increased, so has the SIP stoppage ratio (see Rising SIP Stoppage Ratio). The SIP stoppage ratio is calculated by comparing the number of SIPs that have been discontinued to the number of new SIPs that have been started. As of February 2025, the SIP stoppage ratio has hit a record high, surging to 122.76 per cent, from 109 per cent in January 2025, 82.73 per cent in December 2024 and 60.72 per cent in September 2024.

In fact, the number of SIPs discontinued has risen every month from 3.88 million in October 2024 to 5.47 million in February 2025.

Indian stock markets have continued to trade under pressure between October 2024 and February 2025. The benchmark indices, the BSE Sensex and the Nifty, have closed in the red consistently for the last five months. Notably, this is the longest such streak since 1996. As of February 28, 2025, the Nifty and the Sensex have fallen 15.8 per cent and 14.86 per cent, respectively, from their 52-week high in the five-month period. However, there was slight recovery later in March, at the time of going to print.

The downtrend combined with a high stoppage ratio has left many mutual fund investors, who are still invested and have not given in to the herd mentality of exiting the market when they are lower, in a dilemma much like Shakespeare's protagonist Hamlet. Our modern day Hamlets struggle with a financially loaded decision whether to 'SIP or to STOP SIP'.