Mutual Fund SIP Inflow Hits Record-High; All Details Here

In the first seven trading sessions of 2025 foreign institutional investors (FIIs) sold Indian equities worth over $2 billion. However, monthly systematic investment plan (SIP) in mutual funds surged to an all-time high of ₹26,459 crore in December 2024 as compared to November, industry data shows.

Nifty 50 remained subdued as the index fell 10% below its peak. Though SIP inflows remained robust, the benchmark index came under pressure on account of persistent FII outflows, high valuations, and global uncertainties.

Market expert Sandip Sabharwal attributed this behaviour to FIIs' cautious approach and the diversion of domestic funds toward initial public offerings (IPOs) and qualified institutional placements (QIPs). He told ET now, “The equity cult in India is now well-established… and regular SIP flows are likely to continue.” However, Sabharwal noted that flows haven't cheered the secondary market as FII remained net sellers

Though SIP contributions remain consistent, net inflows into the secondary market are not up to the mark as “foreign investors have been sellers and there has been a spate of QIPs as well as IPOs of companies. So, those are taking away the impact on the secondary market because on a net basis flows into the secondary market are not very substantial because IPOs are taking away a lot of money and then foreign investors have been sellers largely,” Sabharwal said.

Currently, Nifty 50 has been facing downward pressure on the back of valuation concerns, earnings downgrades, and a weakening rupee, which slumped to 85.93 against the greenback. FIIs are now shifting their focus to safer options like US markets where sentiments remain optimistic.

Commenting on the bearing outlook, HSBC has downgraded India’s market outlook to neutral, while keeping a reduced target for Sensex in 2025.

Additionally, uncertainties surrounding the US Fed's interest rate outlook and trade policies under Trump 2.0 can limit foreign participation in Indian markets.

Though SIP inflows provide consistent liquidity, their meager impact on the secondary market beckons the challenge of maintaining broader market momentum, Sabharwal observed. He warned that negative returns could create ripples within the retail environment.