SIP Stoppage Ratio Increases To 109 Per Cent Amid Market Downturn - Know What Investors Can Do

In January 2025, the number of Systematic Investment Plan (SIP) accounts which were discontinued exceeded the number of accounts which were opened afresh,  pushing the stoppage ratio to 109 per cent as per data from the Association of Mutual Funds of India (AMFI).

The SIP stoppage ratio saw a sharp increase in January compared to December when the ratio stood at 82.73 per cent. This suggests more investors are withdrawing from their investments as the equity market continues to be in the red zone.

SIP is an investment plan wherein investors invest a fixed amount in a mutual fund scheme periodically at fixed intervals - typically once a month instead of making a lump-sum investment.

What Is SIP Stoppage Ratio?

The SIP stoppage ratio is a percentage that measures the number of discontinued or expired SIPs against the number of new SIP registrations in a month.

It is calculated by dividing the number of discontinued SIPs by the number of new SIPs opened, then multiplying by 100 to get the percentage.

SIP Stoppage In January

During the month under review, as many as 61.33 lakh SIP accounts were either discontinued or completed their tenure, while 56.19 lakh new SIP accounts were opened. In December 2024, the number of discontinued SIPs stood at 44.9 lakh, while new registrations were slightly higher at 54.27 lakh.

As a result of the higher number of account discontinuations in January, the total number of outstanding SIP accounts stood at 1,026.89 lakh by the end of the month, down 0.5 per cent from 1,032.03 lakh accounts.

So far in the current financial year (FY 2025-26), 5.95 crore new SIPs were registered and 4.08 crore were discontinued.

Stock Market In The Red Zone

The rise in SIP stoppages is likely due to the domestic equity market's decline over the past five months. Both the benchmark indices – Sensex and Nifty – have fallen 11.7 per cent and 12.7 per cent, respectively, from their all-time high levels recorded in late September 2024.

During this period, the combined market capitalisation of all the BSE-listed companies dropped by Rs 78 lakh crore.

On a year-to-date (YTD) basis, Sensex has slipped 2.8 per cent and Nifty has dipped 3 per cent. The smallcap and midcap segment has seen more blood than the large caps, as Nifty Smallcap 100 and Nifty Midcap 100 have fallen more than 14 per cent YTD.

What Investors Can Do?

Aarati Krishnan, Head - Insurance and Investments, PrimeInvestor told Outlook Money that investors should not discontinue their SIPs amid the downturn as SIPs are designed to average the investor’s entry prices lower if markets fall.

“No, you should not stop SIPs. The very purpose of SIPs is to average your entry prices lower if markets fall. SIPs also help you acquire meaningful positions in funds without having to find large lump sums to invest,” Krishnan said.

While there’s no single correct answer to what investors should do amid a market downturn and a rising SIP stoppage ratio, investors should reassess their portfolio, consider the various factors affecting their returns, conduct thorough research, read the scheme information document carefully and then make a decision. Investors can also consider consulting professionals such as SEBI-registered investment advisors before making an investment decision.