SIP inflows surge by 65% in four months amidst rise in new registrations

The net inflow through the Systematic Investment Plan at ₹9,058 crore accounted for 56 per cent gross inflow of ₹17,073 crore in July with the number of new SIP increasing at a faster pace. In fact, it has been growing since July when net SIPs added up to only 36 per cent of gross inflows.

The net SIP inflows last month jumped 65 per cent to ₹9,058 crore against ₹5,494 crore in July.

Incidentally, the gross SIP inflows had hit a new high of ₹17,073 crore against ₹14,734 crore in July, an increase of 16 per cent.

The net SIP accounted for 55 per cent of gross inflow in January and fell to 36 per cent in July before moving up, showed an analysis of data from the Association of Mutual Funds in India.

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Nilesh Shah, Managing Director, Kotak Mahindra Asset Management Company, said many investors waiting for a steep fall in the market to restart equity investment were disappointed with the relentless rally and paid a high price.

Market volatility and SIPs

Retail investors are using the SIP route to tap the equity market to battle the concern of higher valuation. This is one of the reasons why there has been a steady increase in SIP inflows, he added.

The total number of SIP accounts has jumped 23 per cent to a record high of 7.44 crore against 6.05 crore in the same period last year.

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With about 95 per cent of the SIP investment pouring into equity, the share of SIP at ₹9,058 crore increased to 33 per cent of gross equity sales from 27 per cent in October.

Melvyn Santarita, Analyst, Morningstar Investment Research India, said while both the mid- and the small-cap categories have the potential to deliver good returns, these categories inherently are volatile with sharp drawdown risks.

Investors should opt to invest in these categories through the SIP route to ride the volatility, he added.

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Gopal Kavalireddi, Vice President of Research at FYERS said with elections around the corner and expectations of better FII flows in stock markets, equities could continue to rally, with minor intermittent profit booking.

Taking advantage of the market buoyancy, 6 out of the 14 NFOs launched by AMCs were equity-oriented, raising ₹1,907 crore of the overall ₹2,583 crore funds mobilised.