Sensex falls 3,800 pts in 7 weeks, Nifty down 4%: Should you stop your SIP for a while? Here's what market experts say

Markets decline: What should you do with your SIPs?

• Nifty 50 and Sensex fell over 4% from recent lifetime highs.
• Experts advise continuing SIPs during downturns for long-term benefits.
• Investors may gradually increase SIPs or deploy lump sums in suitable tranches.

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Indian benchmark indices have seen some downturn recently, after hitting fresh lifetime highs. Market experts have suggested what investment strategy investors should take with their SIPs at these levels.

Nifty 50 has declined nearly 1,100 points (more than 4 percent) from its lifetime high of 26,373.2, which it had hit on January 5. Sensex meanwhile tumbled around 3,800 points (more than 4.4 percent) after hitting an all-time high of 86,159.02 on December 1 last year.

Nifty 50 declined 353 points (1.38 percent) to 25,232.50, while Sensex dropped around 1,066 points (1.28 percent) to 82,180.47 on January 20.

What should you do with your SIPs?

As markets decline, investors remain worried about their Systematic Investment Plans (SIPs). However, periods of corrections are where SIPs demonstrate their true strength, said Gurmeet Singh Chawla, Director of Master Capital Services Ltd. SIP allocations during lower market levels provides cost averaging, allowing investors to accumulate more units at reduced prices, which incrementally improves long-term returns and compounding, he said.

"Waiting for stability often results in missing attractive entry points, while continuing SIPs during corrections builds discipline and removes emotional decision-making from the process. For long-term wealth creation, consistency matters far more than by attempting to time market inflection points," the analyst said.

'Avoid trying to time the perfect entry'

Markets correct after lifetime highs, and such phases are a part of the investment cycle, said Vivek law, Editor In Chief of Simple Hai. “While short-term volatility can be uncomfortable, long-term investors must avoid trying to time the perfect entry,” he said.

The analyst noted that corrections provide a good opportunity to deploy capital in a gradual manner, rather than wait endlessly for deeper lows. “SIP investors should continue their investments, since market downturns help improve long-term returns due to rupee-cost averaging. Investors with surplus funds may consider selectively increasing SIP allocations or deploying investments in a staggered manner, provided their risk appetite and time horizon are in alignment with their financial goals,” he said.

'Do not stop existing SIPs'

Arjun Guha Thakurta, Executive Director at Anand Rathi Wealth, said the current downturn is not really a correction as markets are only 3-4 percent down from their lifetime highs. However, he added that these can be the phases when it makes sense to add gradually to SIPs instead of waiting for a perfect level.

“The important thing is to not stop existing SIPs, and incase one can do step up then one should definitely go for it,” the analyst explained. “With the India budget event coming up, some amount of volatility can be expected in the market. However for SIP investors, this volatility works in their favour because it helps in accumulating more units at better prices over time,” he added.

For investors who have a lump sum amount to invest, the money can be deployed gradually in three or four weekly tranches to smoothen entry levels, Thakurta said, adding that the long term outlook for Indian markets remains positive, macro indicators are supportive, and markets have already gone through a fair bit of time and price adjustment over the last year.

"It is also important that investors follow a sensible market cap allocation within the equity portion of their portfolio, with around 50 to 55% in large cap, 20 to 25% in mid cap, and the balance in small cap funds," he said.

'Modestly increase SIPs instead of waiting for the perfect bottom'

Khushi Mistry, Research Analyst at Bonanza, said that this kind of pullback from fresh highs is usually a healthy correction, and not an automatic signal to either rush in aggressively or exit. "For most investors, continuing and modestly increasing SIPs through such phases works better than waiting for an elusive perfect bottom. With sentiment still cautious and near-term downside possible, staggered deployment (phased buying over the next 3–6 months) into high-conviction names or diversified funds is generally more prudent than a large one-shot bet," the analyst said.

Evidence across cycles shows that stopping or pausing SIPs to time corrections tends to reduce long- term wealth, even if returns in percentage terms sometimes look slightly better when starting after a fall, Mistry explained, adding that continuing SIPs through drawdowns allows investors to buy more units at lower levels, which is the core edge of rupee-cost averaging in volatile markets.

'Quality and patience drive long-term wealth creation'

Naren Agarwal, CEO of Wealth1, also highlighted that market corrections after hitting fresh lifetime highs are a normal part of equity cycles. "Historically, Indian equity markets have seen 10–15% corrections almost every 12–18 months, even within strong bull phases, yet the Nifty 50 has delivered around 12–14% CAGR over the last two decades. SIP data also reinforces the case for discipline, with monthly SIP inflows in India now above ₹20,000 crore, reflecting investors’ preference for systematic investing through volatility," he said.

"Continuing SIPs, and selectively increasing allocations during market downturns for long-term goals, allows investors to benefit from rupee-cost averaging when valuations moderate. That said, any incremental exposure should remain aligned with individual risk profiles, asset allocation and time horizons, as quality and patience drive long-term wealth creation,” he added.

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