With the sharp fall in markets and moderation in valuations over the last two months, investors have lifted the ‘pause’ on their monthly SIP contribution to let their investments flow.
The value of SIP accounts discontinued last month fell five per cent to ₹8,242 crore against ₹8,678 crore logged in September. The same in August was ₹8,743 crore, according to data from the Association of Mutual Funds in India.
The net SIP inflow last month was up 18 per cent to ₹8,686 crore against ₹7,364 crore in September. The benchmark index Sensex dipped by 1,953 points last month to 63,875 points against 65,828 points in the previous month.
Kavitha Narayan, Vice President & Head - Research & New Initiatives, Capricorne Mindframe, said relatively lower SIP closures last month than the previous month resulted in higher net SIP inflows.
While small and mid-cap sectors remain an attractive investment option for now, she added that a lot depends on the risk-reward ratio these stocks in these two categories offer going forward.
The net SIP inflow accounted for 51 per cent or Rs 8,686 crore of the overall record inflow of Rs 16,928 crore. This is even though the new SIP account opened was down six per cent last month at 34.66 lakh against 36.77 lakh in September.
In a pleasant surprise, the number of SIP accounts discontinued also fell sharply by 15 per cent to 17.57 lakh against 20.69 lakh in September despite overall assets under management of SIP slipping by ₹10,439 crore or one per cent to ₹8.60 lakh crore against ₹8.71 lakh crore in September.
Of the overall net SIP inflow of ₹8,686 crore last month, equity schemes accounted for ₹7,048 crore, while that of debt and hybrid schemes was at ₹354 crore and ₹631 crore. Inflow into solution-oriented and other schemes were at ₹123 crore and ₹529 crore.
The increasing clout of domestic institutions, high net worth and retail investors have diminished the influence of foreign portfolio investors. Between August and November 15, FPIs sold stocks worth ₹83,422 crore, while DIIs alone bought stocks for ₹77,995 crore.
VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said FPI selling is completely getting neutralised by DII and individual investor buying, and this is the reason why Nifty is holding at an early August level of about 19,700 points.
The resilience of the market and strong up moves on favourable days have forced a rethinking in FPI strategy as buyers in the last two days after sustained selling in the first two weeks of November, he added.