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How systematic are SIPs?

Do investors keep their SIPs running through market drawdowns, or cancel out of fear? Testing whether SIP flows are the "sticky money" that stabilises Indian equities.

24 February 2026 • 3 min read • By

The Why

Everyone calls systematic investment plans (SIPs) the steady money in Indian equities. This piece tests that. During market drawdowns, do investors keep their SIPs going, or do they cancel them out of fear of further losses?

It matters because SIPs are treated as “sticky money”: a structural cushion that keeps domestic institutional investor (DII) buying even when foreign portfolio flows turn negative. If that money keeps coming in a fall, it steadies the market. If retail investors pause or stop their SIPs when markets drop, the cushion is thinner than people think.

Pinch(es) of Salt

The test uses equity mutual fund AUM growth, which is not the same as SIP money, for 2 reasons.

First, AUM moves with both new money and prices. In a fall, the mark-to-market drop in what the funds already hold can slow AUM growth even if SIP money keeps coming in.

Second, AUM holds more than SIPs: lump sums, institutional money, switches between schemes, systematic transfer plans (STP), systematic withdrawal plans (SWP) and other investors, depending on how the AMFI data is built. And people do change behaviour in a fall: some redeem to limit losses, some pause SIPs, some move to debt funds, and income worries, job losses or shocks like COVID make households more careful still.

The Test

Monthly equity mutual fund AUM from the Association of Mutual Funds in India (AMFI) is set against market stress, measured as the Nifty's drawdown: how far it sits below its last peak. Alongside it are month-on-month AUM growth, the same growth a month earlier, the market's return, and how deep and how long each drawdown was. The question: does AUM growth weaken when the market is under stress?

What the Numbers Say

1. Deeper falls mean slower growth

With drawdown alone, the link is strong and statistically significant. The drawdown coefficient is 0.4835 (t = 6.75, p < 0.001): a 10% market drawdown reduces AUM growth by roughly 4.8 percentage points. The model has an R² of 0.391, and the link holds after adjusting for heteroskedasticity using robust HC3 standard errors (robust p = 0.015).

SIP investors do not panic in a correction, but they buy less when markets fall.

2. How deep matters, how long does not

Adding how long the drawdown lasted changes little. Drawdown stays at 0.4960 (p < 0.001; robust p = 0.026), duration is statistically insignificant (coefficient = 0.0006, p = 0.590), and R² = 0.394. A sharp fall makes investors careful quickly, but a long sideways market does not make it worse. Investors react to pain, not to waiting.

3. Last month's flows do not predict this month's

If flows ran on habit, last month's growth would predict this month's. It does not: drawdown stays at 0.4595 (p < 0.001), last month's growth is insignificant (coefficient = 0.0626, p = 0.565), and R² = 0.393. Flows answer to the market, not to momentum.

4. Rising markets pull money in harder

Adding the month's market return gives the strongest model. Drawdown is 0.3410 (p < 0.001), market return is 0.3227 (p < 0.001), and the R² of 0.527 means market conditions explain more than half of AUM growth. Good months strengthen flows and falls weaken them, so retail investors are moderately procyclical.

The Bottom Line

Most investors stay the course. SIPs are rarely switched off in bulk, and retail money keeps flowing into equity funds through corrections. Why this matters: the SIP cushion is real, but it is a cushion, not a wall. Deeper falls still slow the money down, because people keep their SIPs but hold back on anything extra. SIPs are systematic. The investors behind them still move with the market.

Update, 9 October 2026. Fund assets move with prices, so slower AUM growth in a fall does not by itself mean SIP investors paid in less. A later piece, Should you stop your SIPs?, checked AMFI's direct SIP figures. Monthly SIP money rose during each big Nifty 50 fall since 2020, and the one real pullback came in the months after the 2020 bottom, as the market recovered.

Sources

Every figure comes from AMFI's monthly reports and NSE's Nifty 50 closes.

Data

Official releases

Methods