?? SIP it or Skip it? Why Investors Are Pressing Pause!

Hey there,

If you’re a regular SIP investor, you might have noticed a lot of buzz lately about SIP stoppages. And guess what? The data backs it up!

In January, the SIP stoppage ratio shot up to 109%, a big leap from 82.73% in December and just 60.72% in September. This means that more people are either stopping or letting their SIPs expire compared to new registrations. In numbers, 61.33 lakh SIPs were discontinued in January, while 56.19 lakh new SIPs were started. Meanwhile, total SIP inflows dipped slightly to Rs 26,400 crore from Rs 26,459 crore in December.

So, what’s happening? The stock market hasn’t been too kind lately. The Nifty 50 and Sensex have both fallen by about 5% and 4% over the past six months. But the real concern is in the mid and small-cap space, which has tumbled nearly 20%, entering bear market territory. Additionally, Foreign Institutional Investors (FIIs) have been net sellers, withdrawing Rs 3,450 crore from the market, while Domestic Institutional Investors (DIIs) have been stepping in with Rs 2,885 crore in purchases to support the market.

Here’s the catch: the sharp increase in SIP stoppage isn’t just about market panic. AMFI (Association of Mutual Funds in India) clarified that a recent SEBI rule required mutual fund companies to close SIP accounts that had been inactive for more than three months. This ‘clean-up’ contributed to a major part of the stoppage numbers.

Moreover, many investors are reconsidering their portfolio allocations due to concerns about market overvaluation, particularly in the mid and small-cap space, where returns have been strong but volatility is high. Some investors are shifting towards safer asset classes like debt mutual funds, fixed deposits, and gold as a hedge against uncertainty.

So, should you panic and stop your SIPs too? Not really! SIPs are long-term investments, and market fluctuations are part of the journey. In fact, history has shown that investors who stay put during downturns often benefit the most when markets recover. Past market cycles have demonstrated that those who continue their investments in bearish phases reap significant rewards in the long run.

What should you do now? Take a step back, reassess your investment strategy, and ensure your asset allocation matches your risk appetite. If you’re feeling cautious, consider a balanced approach instead of stopping your SIPs altogether. Additionally, diversifying your investments across different asset classes can help reduce overall risk.

Remember, investing is a marathon, not a sprint! Staying consistent and avoiding impulsive decisions is key to long-term wealth creation.

? Coming up next week!

??Indian benchmark indices remained in consolidation this week, influenced by multiple local and global factors. US President Trump’s tariff threats, strengthening of the dollar against the rupee, India Inc’s weak Q3 earnings, and domestic growth slowdown contributed to market volatility.

General Market Overview:

• Indian markets saw mixed reactions, with Sensex and Nifty responding to global economic shifts.
• Analysts anticipate potential upside if markets break key resistance levels.
• Key influences include inflation trends, RBI policies, and global trade uncertainties.

Key Events Next Week:

Monday (February 24)

• Euro Area Inflation Rate: The annual inflation rate in the Euro Area edged up to 2.5% in January 2025 from 2.4% in December. The final reading will be announced.
• Euro Area Consumer Price Index (CPI): CPI in the Euro Area decreased to 126.71 points in January 2025 from 127.07 points in December. The final numbers will be revealed.

Thursday (February 27)

• Euro Area Consumer Confidence: Consumer confidence in the Euro Area rose by 0.3 points to -14.2 in January 2025, in line with preliminary estimates. The final data will be published.
• US Initial Jobless Claims: Jobless claims in the US fell by 7,000 to 213,000 in early February. The data for the week ending February 15 will be released.

Friday (February 28)

• India Foreign Exchange Reserves: Forex reserves in India increased to $638.26 billion (as of February 7) from $630.61 billion in the previous week. Data for February 14 will be announced.
• India GDP Annual Growth Rate: India’s GDP grew 5.4% in Q3 2024, slowing from 6.7% in Q2, missing market expectations of 6.5%. The Q4 data is expected by the end of February.

Additional Market Influencers:

• Global trade developments and potential tariff impacts.
• Foreign institutional investment (FII) outflows and domestic investor activity.
• Sector-specific trends, particularly in technology, banking, and manufacturing.

Market participants should stay informed and adjust their strategies accordingly.

?? Prime Wealth Finserv In Media?

Chakrivardhan Kuppala., Wrote for Live mint

Budget 2025, RBI repo rate cut: Debt mutual funds just got more tax efficient; check how

Chakravarthy V., wrote for Live mint

Why are mid & small-cap stocks tumbling in 2025? Here are 5 key factors behind the decline

Hope you liked reading it as much as we did writing it! See you! ?????? SIP it or Skip it? Why Investors Are Pressing Pause!