The Nifty just closed FY2026 down over 5%. Thousands of investors quietly stopped their SIPs. And yet, monthly SIP inflows hit an all-time high of ₹31,000 crore. Someone kept going. The question is whether they were right to.
In today's piece, we talk about how SIPs really performed in FY2026, a year when geopolitical tensions rattled global markets and the Nifty shed 11% in March alone.
Quick disclaimer before we begin. Stocks or sectors mentioned here are only for context and not investment advice. Please do your own research or consult a registered SEBI-registered financial advisor before investing.
Now onto today's story.
The Story
Today is March 31, 2026. FY2026 just ended. And depending on where you look, the story of this financial year is either a disaster or a quiet triumph. It all comes down to one question: did you keep your SIP running?
Here is what the numbers say about FY2026. The Nifty 50 closed Monday at 22,331, down over 5% for the full financial year. The Sensex lost more than 7%. The 52-week high on the Nifty was 26,373, meaning investors who bought at the top and held are sitting on a drawdown of nearly 15%. In March alone, the Nifty fell 11%, which was one of the worst single-month performances in years. A West Asia conflict that entered its fifth week, crude oil crossing $115 a barrel, and FIIs pulling out tens of thousands of crore from Indian equities. It was not a gentle year.
So in the middle of all this, what happened to your SIP?
The honest answer is: it depended on when you started, what you were invested in, and whether you actually stayed the course.
Let us start with what went right. Monthly SIP inflows crossed ₹31,000 crore in December 2025, a new all-time high at the time. SIP inflows crossed ₹29,845 crore even in February 2026, when markets were already looking bruised. Total SIP AUM reached a record ₹16.64 lakh crore around the same time. The money kept coming in. That is not a small thing.
Retail India, it turns out, has more backbone than the market gives it credit for.
But here is where it gets complicated.
Returns from equity mutual fund schemes slipped into negative territory over the past one and two years for many categories. Small-cap and flexi-cap funds saw average SIP losses of around 15% and 14% respectively over the one-year period. Even large-cap and multi-cap schemes were down roughly 13 to 14% over the same window. If you started your SIP in early 2025 and you are checking your XIRR today, the number is probably negative. That is painful, especially if you were expecting SIPs to be a smooth, safe road to wealth.
And the pain showed in behaviour. The SIP stoppage ratio climbed to 76% by February 2026, meaning for roughly every four new SIPs started, three were being shut down. This is not a crisis number in isolation, but the trend was uncomfortable. Investors who entered the market after 2020 in the post-COVID bull run had, in many cases, never seen a genuinely bad year. FY2026 was their first real test.
So did SIPs actually save you? Or did they just slow down the pain?
The answer lives in a very boring but important concept called rupee cost averaging. When the market drops, your fixed monthly instalment buys more mutual fund units than it did when the market was high. So while your portfolio statement looks red, you are quietly accumulating more units at cheaper prices. The return on those units will depend on what the market does from here, not on what it has done already.
Think of it this way. If you invested ₹10,000 a month through FY2026, you were buying units at Nifty levels ranging from 26,000 down to 22,000. Your average purchase price is somewhere in between. The investor who stopped their SIP when the Nifty fell through 24,000 locked in that average cost permanently. The investor who kept going is still averaging down.
Data from Nifty 50 SIP observations shows that even when investors faced losses of more than 20% in the first year, those who stayed invested went on to earn 11 to 13% average returns over the next four years. This is not a guarantee. But the pattern is consistent enough to take seriously.
A 30-year back-test comparing a pure monthly SIP of ₹10,000 against a strategy of investing lump sums only when the Nifty fell 10% found that both strategies delivered roughly the same XIRR over the long run, around 12 to 12.5%. The SIP investor made ₹3.38 crore. The dip-buyer made ₹3.9 crore. The difference over three decades was meaningful but not dramatic. What was dramatic was how much harder the dip-buying strategy was to execute emotionally. You never know if a 10% fall is the bottom, or just the beginning of a 30% fall.
Which is exactly what made FY2026 so hard.
The market fell. Then it fell some more. Then geopolitics got worse, crude spiked, and the Nifty closed the financial year not at a recovery but at a five-year earnings multiple that many analysts consider fair, not cheap. There was no clean bounce to reward the disciplined investors yet. That reward, if it comes, will arrive in FY2027 or later. And if you stopped your SIP in January or February, you will not be there for it.
There is also a counterweight worth naming honestly. Not everyone who stopped their SIP was acting out of fear. Some people had legitimate financial stress. Inflation hit. Job markets were not universally strong. A family emergency can make a ₹10,000 monthly commitment genuinely difficult. Experts acknowledge that personal financial challenges are valid reasons to pause, and that SIPs should be restarted as soon as stability returns. Pausing is not the same as quitting.
The real mistake is a different one: pausing because the market fell, and then waiting for confidence to return before restarting. That logic turns rupee cost averaging on its head. You stop buying cheap units, and you restart buying expensive ones once the headlines feel better.
So what does FY2026 really tell us about SIPs?
It tells us that SIPs are not a return-generating machine. They are a behaviour-management machine. The whole architecture of SIPs is designed around one insight: that most retail investors will make poor timing decisions if given the option. So the solution is to take the decision away, automate the investment, and let time do the heavy lifting. A falling market is the best test of whether that machine is working. And in FY2026, about 76% of the investors who started new SIPs had the discipline or the inertia to keep their existing ones running. That is not bad.
Here is the question that should follow you into FY2027. The market is now lower than it was a year ago. Valuations, by most measures, have corrected significantly from the frothy peaks of late 2024. If you were comfortable buying mutual fund units at Nifty 26,000, why would you be uncomfortable buying at Nifty 22,000?
The answer, usually, has nothing to do with math.
Until then…
If today's piece helped you think more clearly about your SIP, share it with someone who is on the fence right now. It might be the nudge they need.
This article is for educational purposes only. Not investment advice.
Happy Investing 😎
Nataraj Malavade
Investor, Trader, Author & Mentor
www.natarajmalavade.in
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