The number of new SIPs (systematic investment plans) registered in September at 8.50 lakh was the slowest addition in six months. It is hardly surprising given how the broader markets have been in a bearish mode for close to two years now; the number of companies with market capitalisation of `1,000 crore or more fell to 670 as on October 11 from the peak of 853 in Q3FY18 and 767 at the beginning of 2019.
The Sensex lost 1.4% over the last six months while the BSE mid-cap and small-cap indices declined 10.3% and about 15%, respectively, over this time.
In the three months ended June, new SIPs registration crossed 9 lakh a month. In July, they went up to 10.19 lakh. However, the number dropped to 8.80 lakh in August and further in September. The number of new SIPs registered in the first six months of the current fiscal stood at 55.45 lakh collecting `49,361 crore. In the first six months of last financial year, the number of new SIPs registered was 61 lakh collecting `44,487 crore.
Market participants say that investors might have deferred investments due to the volatility in markets, coupled with the slowdown in the economy and weak returns from mid- and small-cap funds.
Ashwani Bhatia, managing director and chief executive officer at SBI Mutual Fund, said: “New registration of SIPs might have slowed a bit, but overall volumes remain robust. The fall might be due to the volatility and uncertainty over slowdown which investors read in newspapers.” He added that this is perhaps the right time for investors to enter the market.
Although the number is very small, some investors have discontinued their SIPs. In the current financial year, around 33.75 lakh SIPs have been discontinued. In the first six months of FY19, around 28.21 SIPs were discontinued. The total assets under management (AUM) of SIPs as on September stood at `2.88 lakh crore. Market participants say that surge in the value of the SIP amount is due to the increase in ticket-size of investments by investors.
G Pradeepkumar, chief executive officer at the Union Asset Management Company (AMC), said, “Fall in new SIPs registration is to do with the market volatility and particularly the fall seen in mid- and small-cap segments. Many investors are actually at loss compared to their cost of investments in mid- and small-cap funds which might have dampened the sentiments for fresh investments. But, I think this is a passing phase and with the market recovering, sentiments will also improve.”
Even inflows into the equity funds slowed down in September as the month witnessed inflows of `6,609 crore, the lowest in the last four months of this fiscal. The average return of mid-cap funds is 4.89% in the last one year, while it was 0.23% for small-cap schemes, the Amfi data show.