When the market falls, what happens to SIP?

When the market falls what happens to SIP? : Indian equity markets experienced one of their worst declines in years in February and March of 2026. The Nifty IT experienced its greatest decline since 2020, falling more than 21% in just one month. India’s anxiety index, the India VIX, nearly doubled in a month from 13.70 on March 2 to 27.89 by April 1 due to geopolitical stress from the US-Iran confrontation.

The majority of individual investors froze. Many hurried to get out. However, according to AMFI data, SIP inflows reached a record Rs 32,087 crore in March 2026. Systematic Investment Plan contributions were robust at Rs 31,115 crore, up over 18% year over year, even in April, which was still a volatile month.

 

What Does SIP Mean?

The key word here is “regardless.” A Systematic Investment Plan is a way to invest a set amount in a mutual fund at scheduled times regardless of where the market is. SIPs do not stop when stocks fall or wait for the market to recover before investing.

This regularity is what distinguishes them from lump-sum investing and is also what makes them controversial in a crash. Consider it a stock market-related automatic savings habit.

The essential term here is “regardless.” When stocks decline, Systematic Investment Plan continue. They make investments without waiting for the market to rebound. They differ from lump-sum investments exactly because of this regularity, which also makes them contentious after a downturn.

Read Also : The Impact Of Interest Rate Cuts On The Stock Market

What Your SIP Actually Experiences When Markets Drop?

Consider your Systematic Investment Plan as purchasing rice each month at a set ₹1,000 budget. You get 25 kg of rice for ₹40 in January. You may purchase 30 kilos for ₹40 in February. It further decreases to ₹35 in March, when you receive 30 kilos.

You didn’t take any different action. Each month, you purchased the same ₹1,000. However, you automatically received a greater amount for your money when the price dropped.

That’s precisely what takes place within your SIP. The price per unit of your mutual fund is known as NAV (Net Asset Value). The NAV declines when markets decline. At the lower NAV, you can purchase additional units with your fixed Systematic Investment Plan amount. When markets inevitably rebound, all those additional units you purchased during a downturn will multiply in value.

 

Why It’s Not a Good Idea to Stop Your SIP Now?

When markets are declining, it makes sense to have the inclination to cease investing. It is similar to damage control. However, it is nearly usually the opposite. When prices are at their lowest, you stop, and you don’t return until they have increased once more.

In late April 2026, after approximately three months of net sales activity, foreign institutional investors became net buyers. A major portion of that selling stress was absorbed by domestic investors, who were helped by consistent Systematic Investment Plan flows. During the worst of the FII exodus, DII buying, primarily fueled by SIP money, kept prices steady.

In the meantime, the overall Assets Under Management (AUM) of the mutual fund industry increased from Rs 73.73 lakh crore at the conclusion of March to Rs 81.92 lakh crore by the close of April. Even if equities sentiment was still unstable, this was a notable increase.

 

When the Nifty drops, should I discontinue SIP?

No, terminating a SIP during a decline entails locking in your document’s losses and ceasing to purchase units at their lowest cost. According to AMFI data, Systematic Investment Plan collections barely decreased in FY 2020–2021; investors who persevered received annualized returns of 15–22% by 2024–2025.

 

Can returns from SIP be negative?

Indeed, in the near future. At its worst during the 2008 meltdown, a one-year investment yielded returns of about -30%. Nonetheless, the likelihood of negative SIP returns in diversification equity funds decreases significantly over 5-year periods. For broad-market index funds, it has generally approached zero over ten-year periods.

 

In a declining market, how long should I keep doing SIP?

Proceed through full market cycles for a minimum of five to seven years. Systematic Investment Plans broke even in just 18 months after beginning in January 2008, just before a 65% drop. Eight-year holdings produced annualized returns of about 15%. Time in the market is preferable to market timing.

Read Also : How To Get Started Investing In US Stocks From India

Is step-up SIP superior to regular SIP?

Considerably. In 15 years, a ₹10,000 monthly flat Systematic Investment Plan with 12% yields will be worth almost ₹50 lakh. The same initial SIP increases to over ₹95 lakh with a 10% yearly step-up, almost doubling the corpus. The returns on each extra rupee compound over years, but the overall amount invested is bigger.

 

What is the recommended SIP quantity for novices?

Start with as little as ₹500 a month, or whatever you can consistently invest. Amount is not as important as consistency. As your salary increases, use a step-up Systematic Investment Plan to increase by 10% a year. Systematic Investment Plan may now be made on most platforms for as little as ₹100.

 

When the market crashes, is lump sum better than SIP?

Lump sum would win if you could pinpoint the precise bottom. However, nobody can precisely time the bottom. Because Systematic Investment Plans purchases units throughout the decline, including at the lowest prices, it routinely outperforms lump sum during crash-and-recovery periods.

Systematic Investment Plan is the logical and sensible approach for salaried individuals who use their monthly income for investments.