Indian benchmark indices have witnessed notable declines from their recent lifetime highs, prompting investors to question their Systematic Investment Plan (SIP) strategies. Market experts, however, are advising investors to maintain their disciplined approach during this correction phase.

Market Performance Overview

The recent market performance shows significant retreats from peak levels across major indices:

On January 20, Nifty 50 declined 353 points (1.38%) to close at 25,232.50, while Sensex dropped 1,066 points (1.28%) to 82,180.47.

Expert Recommendations on SIP Strategy

Gurmeet Singh Chawla, Director of Master Capital Services Ltd, emphasized that correction periods showcase SIP's true strength. "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 explained.

Chawla highlighted that waiting for market stability often results in missing attractive entry points, while continuing SIPs during corrections builds discipline and removes emotional decision-making. He stressed that consistency matters more than attempting to time market inflection points for long-term wealth creation.

Vivek Law, Editor In Chief of Simple Hai, noted that market corrections after lifetime highs are part of the natural investment cycle. "While short-term volatility can be uncomfortable, long-term investors must avoid trying to time the perfect entry," he advised.

Strategic Deployment During Corrections

Experts suggest several approaches for investors during the current market phase:

• Continue existing SIPs without interruption
• Gradually increase SIP allocations for investors with surplus funds
• Deploy lump sum investments in staggered tranches
• Maintain alignment with risk appetite and time horizon

Arjun Guha Thakurta, Executive Director at Anand Rathi Wealth, characterized the current downturn as not a significant correction since markets are only 3-4% down from lifetime highs. "The important thing is to not stop existing SIPs, and in case one can do step up then one should definitely go for it," he recommended.

Portfolio Allocation Guidelines

Thakurta provided specific allocation recommendations for equity portfolios:

For lump sum investors, he suggested deploying money gradually in three or four weekly tranches to smoothen entry levels, noting that long-term outlook for Indian markets remains positive with supportive macro indicators.

Market Outlook and Timing Considerations

Khushi Mistry, Research Analyst at Bonanza, described the current pullback as a healthy correction rather than a signal to exit aggressively. "For most investors, continuing and modestly increasing SIPs through such phases works better than waiting for an elusive perfect bottom," she stated.

Mistry emphasized that evidence across market cycles shows stopping or pausing SIPs to time corrections tends to reduce long-term wealth. She recommended staggered deployment over the next 3-6 months into high-conviction names or diversified funds as more prudent than large one-shot investments.

The analyst explained that continuing SIPs through drawdowns allows investors to buy more units at lower levels, which represents the core advantage of rupee-cost averaging in volatile markets. With the upcoming budget event, some volatility is expected, but this works in favor of SIP investors by enabling accumulation of more units at better prices over time.

Systematic Investment Plan (SIP) inflows have demonstrated remarkable resilience amid challenging market conditions, reaching a record ₹31,000 crore in December 2025. This represents a significant increase from ₹29,400 crore in November 2025, occurring despite sustained foreign investor selling and market volatility that has characterized recent months.

Record SIP Performance Amid Market Challenges

The December 2025 SIP inflows highlight the stability of domestic investment flows even as broader market sentiment weakened throughout the year. The mutual fund industry maintained robust fundamentals during this period:

Analysts attribute this stability to SIPs becoming automated habits linked to salaries, long-term goals, and financial discipline rather than tactical trading decisions. Balasubramanian, Managing Director and CEO of Aditya Birla Sun Life AMC, noted that record inflows demonstrate SIPs increasingly becoming a way of life for Indian investors, with continued investments despite volatility pointing to rising financial awareness and discipline.

Strong SIP Returns Despite Market Volatility

While stock prices struggled during 2025, SIP investors experienced significantly better outcomes. Data reveals that 97% of mutual fund schemes delivered positive returns for SIP investors during the year, with Extended Internal Rate of Returns (XIRRs) reaching as high as 37.00%. Out of 490 active equity schemes available for SIPs at the start of 2025, only 13 ended the year with negative returns.

The Nifty's approximately 9.00% gain in 2025 masked significant pain in mid and smallcap stocks, where retail traders suffered losses. SIP investors benefited from rupee-cost averaging, buying more units during market corrections. Gautam Kalia of Mirae Asset ShareKhan emphasized that historically, every meaningful correction has rewarded disciplined investors who stayed invested, with staggered investing through SIPs being particularly suitable in volatile markets.

Foreign Investor Outflows Create Market Pressure

Foreign Institutional Investors (FIIs) created substantial headwinds for Indian equities through sustained selling. The scale of foreign outflows has been significant:

This selling pressure contributed to the rupee weakening by approximately 5.00% during 2025. Global uncertainty, including tensions involving the US, Venezuela, and Iran, along with trade-related uncertainty, has kept foreign investors cautious. Ponmudi R of Enrich Money noted that while attention is shifting to the India-EU trade agreement, markets remain driven by earnings outcomes and geopolitical headlines rather than optimism.

Domestic Flows Provide Market Stability

The sustained SIP inflows represent a structural shift in Indian equity markets, with domestic flows providing stability against foreign investor volatility. Puneet Sharma of Whitespace Alpha highlighted that Indian equities are no longer driven by foreign inflows alone, with SIPs, mutual funds, and household participation forming a strong, stable base. Heavy FII selling no longer destabilizes markets as significantly as it did previously.

Swapnil Aggarwal of VSRK Capital noted that in tough market conditions, SIPs are generally very helpful, as corrections allow investors to buy more units at lower prices. However, Ishan Tanna of Ashika Equity Research cautioned that while the ability of mutual funds to offset foreign outflows is strong, it is not unlimited, and prolonged heavy selling could increase volatility and pressure specific stocks.