SIP inflows into mutual funds rise to record high but…

S Ranganathan, Head of Research at LKP Securities said, India being the best performing large market year to date in dollar terms, FIIs have been booking profits but Domestic Flows through SIPs are at lifetime highs which reflects the growing maturity and confidence of the Domestic Investors for more than a year now.

Also, Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services said, “The healthiest trend in the Indian equity market now is the steady increase in SIPs which have touched a new record of ₹13307 crores in November. It is a proven fact that SIPs are the most successful mode of investment for retail investors.”

However, although SIPs reached an all-time high, the upside was far slower and dull as the contributions only inched higher by ₹267 crore compared to October’s print of ₹13,040 crore.

Also, Vijayakumar pointed out that even though the total Demat accounts crossing 10 crores is a desirable development many newbie investors are losing money indulging in day trading and derivatives trading. He said, “This is undesirable.”

On the brighter side, SIPs stayed above ₹13,000 crore for the second month in a row. Notably, SIPs were above the ₹12,000 crore mark between May to September before embarking above ₹13,000 crore.

In contrast to this reckless trading culture, Vijaykumar said, “increasing SIPs shows that Indian equity investors are maturing.” He suggested that it is important that SIP investors should not discontinue their investment when markets correct sharply.

Inflows in the mutual funds market continued in November, inflow in equities dropped to a 21-month low while the debt market surpassed equities. The star performer for November were index funds.

Overall, the net inflow in mutual funds stood at ₹13,263.56 crore — lower compared to the inflow of ₹14,046.98 crore in the previous month. In November, index funds recorded an inflow of ₹8,601.73 crore, on the other hand, inflows in equity and debt-oriented schemes stood at ₹2,258.35 crore and ₹3,668.59 crore respectively.

Akhil Chaturvedi, Chief Business Officer, of Motilal Oswal Asset Management Company said, these trends reflect sign of maturity in investors’ mindsets. SIP contribution remaining above ₹13,000 indicates better awareness among retail investors about long-term orientation of equity investments and wealth creation opportunities from India’s growth trajectory.

Further, Chaturvedi added, “investors now have an understanding of seeing short-term volatility as a part and parcel of equity investing. Instead of reading too much into month-on-month dip in net equity inflows, the heartening thing to note is that net equity inflow has remained relatively resilient and investors are willing to look past short-term trends and instead focus on long-term fundamentals.”

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