Why Investors Stop SIPs When Markets Crash
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- Equity mutual fund flows swung from net inflows of ₹12,700 crore in January 2008 to net outflows of ₹2,100 crore by December 2009 as broader indices fell 60-65% during the financial crisis.
- Monthly equity mutual fund inflows declined nearly 30% — from ₹40,600 crore in June 2024 to ₹29,000 crore in June 2026 — despite the absence of a major market crash.
- Ripsy Bondia, assistant professor at IMI Delhi, places SIP investing in the 'intellectually simple but emotionally difficult' quadrant of a 2x2 decision-making grid spanning complexity and emotional difficulty.
- Index fund investors who put ₹10 lakh in at the 2008 peak saw the value fall to about ₹4 lakh after the Sensex plunged roughly 60% in under 10 months.
- The pandemic crash erased nearly 40% of the Sensex in just two months, with investor anxiety amplified by social media chatter, news headlines and app notifications.
- Continuing SIPs through downturns requires resisting crowd panic, and the article notes that buying during crashes rarely feels like an opportunity in real time — only in hindsight.
Why it matters: Indian equity mutual fund inflows have shrunk roughly 30% in just two years without any major crash — suggesting the emotional barrier to SIP continuation is now suppressing flows even in flat markets, not just crisis periods. For India's expanding retail SIP base, the practical consequence is that investors systematically exit near bottoms and miss recovery rallies, turning a simple discipline into a costly emotional decision.
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