retail investor: Retail investor puzzled by mkt volatility? SIP flows slow down but stay above Rs 13K cr in Feb

Remember, SIP inflows touched new record highs for six consecutive months and reached Rs 13,856 crore in January. The figure, however, dropped marginally to Rs 13,686 crore in February.

A deep dive into the data shows that the pace of inflows have been muted since September, even though the figure made new highs every month since then.

“Rangebound markets, expectations of interest rates rising faster, and poor investor sentiments are the key factors driving SIP flows to slow down,” said Viraj Gandhi, CEO of Samco Mutual Fund.

In the last 6 months, Nifty 50 has net lost about 0.3%. But from the record highs it tested on December 1, 2022, the 50-stock index has corrected close to 10%. The Nifty Smallcap 100 index slipped deeper into red, and is down 25% from its lifetime high.

Further, data showed that the number of SIPs being discontinued has been steadily increasing over the last few months. In the April 2022 to February 2023 period, the total SIP discontinuation was over 129 lakhs compared with 111 lakhs in the April 2021 to March 2022 period.

Market insiders, however, aren’t reading too much into the February data to draw any conclusions about the retail investor behaviour in the context of the current market trend. Experts suggest waiting for a couple of months more for a clear view on the trend.

“We need to closely monitor this space for one more quarter to conclude if it’s a reversal or a small pause, and the journey upwards continues for the SIP book,” Gandhi said.

Prateek Pant of WhiteOak Capital Asset Management is not very perturbed by the drop in SIP inflows.

“One should not read much into a month’s data. We are in the midst of a structural trend with rising equity ownership among retail investors,” the chief business officer said.

“Resilient domestic inflows have been a powerful counterbalance to FII selling. So in a nutshell, SIP is a structural growth story in India just as any other consumer appliances,” Pant added.

Although SIP inflows dropped in February, Jeevan Kumar KC of Geojit Financial Services has drawn comfort from the fact that the figure remained steady above Rs 13,000 crore for the fifth straight month.

“Though markets remain volatile, retail investors seem to be more attracted towards mutual funds..Valuations in small caps have reached an attractive level and the same has been reflected in a better inflow of Rs 2,246 crores in the segment,” Kumar, head of investment advisory at Geojit Financial said.

Experts continue to believe that India presents a structural opportunity for investing, even though inflows will vary year-to-year depending on transient factors.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)