Why are more investors stopping their SIPs, holding off on new ones?

“I have discontinued three of my eight SIPs for now as returns had been negative for a few months. Maybe when conditions improve, I will start them again. For now, I have invested a bit in gold and fixed deposits,” said Saswati Chatterjee, a 56-year-old homemaker based in Kolkata.

Many retail investors have taken similar measures, even as the mutual fund industry appears to be powering through turbulent geopolitical conditions and a prolonged period of market stagnation.

Despite experts and industry executives remaining positive about investors’ resilience during difficult market conditions, systematic investment plan (SIP) discontinuations spiked in October, while new registrations slowed. Many investors like Saswati are sitting out for now. Does this signal a cause for concern for an industry that otherwise appears to be in good shape?

Headline numbers hold up

Contributions from SIPs to the industry’s monthly inflows remained above the Rs 30,000-crore mark for the eighth consecutive month in October, data from the Association of Mutual Funds in India (AMFI) showed.

However, new SIP registrations fell nearly 20% month-on-month to 51 lakh in October, while the number of SIPs discontinued during the month rose 19% to 59 lakh. Both metrics recorded their worst performance since April 2025.

This took the SIP stoppage ratio, calculated as the number of SIPs discontinued as a proportion of new registrations, to nearly 117% during the month. This was the highest since the 353% recorded in April 2025.

A higher stoppage ratio can indicate increased churn in the industry or cautious investor sentiment. The elevated ratios between January and April 2025, however, were due to a one-time clean-up of the mutual fund system to remove dormant accounts.

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There is no such one-time factor this time around. For context, the stoppage ratio over the past year has remained between 75%-101%.

Reading the spike

While uncertain market conditions may have contributed to the elevated numbers, experts have called for a more careful reading of the metric.

“The stoppage ratio needs careful reading, as it counts SIPs that completed their tenure along with those discontinued midway,” said Gaurav Goyal, chief business officer at Canara Robeco Asset Management Company.

It is “important to view these numbers in absolute terms”, as SIP stoppages can happen for multiple reasons, including market volatility or the achievement of financial goals, Goyal said.

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“With nearly 10 crore SIP accounts still active, the base remains very large. This does not, by itself, point to any shorter holding periods or increased churn,” he added.

“This ratio measures SIP mandates and not how long investors remain invested or whether they have withdrawn their accumulated investments. And therefore the actual money being invested in market through SIP tells a different story,” said Shweta Rajani, head of mutual funds at Anand Rathi Wealth.

SIP investments in October stood at Rs 32,160 crore, just 1% below the record Rs 32,490 crore recorded in the previous month.

Uncertainty deters investors

SIP discontinuations and the slowdown in new registrations may be stemming from the same factor: market uncertainty.

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“Investor sentiment was cautious, as evident from the fall in industry AUM in September 2026. AMFI data also shows that equity inflows moderated 14% month-on-month amid profit booking and market volatility in October. New SIP registrations tend to follow sentiment with a lag,” said Goyal.

Rajani shared a similar view. “One month’s slowdown should not be mistaken for a structural change in investor sentiment, as this number comes after two strong months, with registrations reaching 66.40 lakh in August,” she said.

“Some moderation in fresh registrations is natural, especially when markets have been volatile and new investors may prefer to wait before making fresh commitments,” she added.

While the benchmark Nifty 50 and Sensex indices have recovered 12-13% in a rally led by foreign money over the past three weeks, they had fallen as much as 16-17% at their lows this year, weighed down by the West Asia war, high fuel prices, a weakening rupee and an exodus of foreign capital.

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Despite the rally, the near-to-medium-term outlook for Indian stocks depends considerably on fuel prices and the global artificial intelligence (AI) trajectory, both of which remain largely beyond India’s control for now.

Potential new investors may, therefore, be refraining from entering the market amid the uncertainty. Many investors whose fixed-tenure SIPs have matured have also preferred not to renew them.

MF executives remain positive

Despite these temporary challenges, industry executives maintain a positive outlook.

“What is encouraging is that even at the lowest level of the year, more than 50 lakh new SIPs were registered during October. Apart from this, the mutual fund industry added 15.80 lakh folios during the month,” said Rajani.

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“This data shows that investors continue to participate in mutual funds, even if the pace of fresh SIP registrations has moderated temporarily. Monthly SIP contributions have the potential to reach Rs 50,000 crore over the next 5 years,” she added.

Such optimism stems from factors such as the continued expansion of the mutual fund investor base, increasing financial awareness and a growing preference for systematic investing.