Nifty has fallen for 8 straight weeks: How should SIP investors rethink their strategy? Experts explain

The Nifty 50 has fallen for eight consecutive weeks, putting investors who systematically invest in equities through SIPs in a familiar but uncomfortable situation. As markets remain weak, the temptation may be to pause SIPs, increase investments to take advantage of lower prices or change the funds in the portfolio.

But a prolonged market correction does not, by itself, require investors to change their SIP strategy. For investors whose financial circumstances and goals remain unchanged, continuing the existing SIP may be more appropriate than reacting to market movements.

“The first response would be: don’t change your SIP just because the market is going through a difficult phase,” said Sanjiv Bajaj, Joint Chairman and MD, Bajaj Capital. A SIP is designed to work across market cycles, he said, including periods when markets are falling.

Should you stop your SIP when markets fall?

One advantage of continuing a SIP during a correction is that the same investment amount can buy more units when prices are lower. This is part of rupee-cost averaging, Bajaj said.

Stopping a SIP, however, creates another problem of deciding when to restart it. Markets can recover before investor sentiment turns positive. By the time an investor feels comfortable investing again, part of the recovery may already have taken place.

This does not mean investors should continue SIPs regardless of their circumstances. Someone facing a job loss, an unexpected expense or a need to preserve cash may reasonably prioritise liquidity.

“But if the only reason for pausing is that the headlines are making you uncomfortable, I would say stay with your plan,” Bajaj said.

For investors whose cash flows and financial goals remain intact, the current correction therefore need not automatically trigger a change in their SIPs.

Should you increase your SIP during the correction?

A market fall can make lower valuations appear attractive, but Bajaj does not recommend increasing SIPs simply because the market is correcting.

Instead, investors should first ask whether their ability to invest has changed.

For instance, an investor whose income has increased but whose SIP has remained unchanged could consider a step-up. Investors with a long investment horizon, particularly 10 years or more, may also have greater flexibility to increase their SIPs because they can potentially stay invested through multiple market cycles.

However, this should come only after the basics are in place, including an adequate emergency fund, appropriate insurance and manageable monthly commitments.

Investors with stretched budgets, expensive debt or goals only a few years away should be more cautious. A market correction should not become a reason to invest beyond one’s means.

Bajaj prefers a gradual SIP step-up rather than a large one-time increase. Increasing the SIP modestly each year as income rises can build investments without putting excessive pressure on monthly cash flows.

“The best SIP is not necessarily the biggest one; it is the one you can continue comfortably through different market conditions,” he said.

When should you actually review your mutual fund?

A falling Nifty does not automatically mean that an investor’s mutual fund needs to be changed.

“A market correction is about the market; a fund review is about whether something has changed in the investment itself,” Bajaj said.

Investors should therefore distinguish between a temporary decline caused by a broader market correction and sustained underperformance of their fund.

A review could be warranted if a fund consistently underperforms its benchmark and comparable funds over a meaningful period. Investors should also check whether there has been a change in the fund manager, investment strategy or portfolio characteristics.

Their own circumstances matter too. A change in investment horizon, financial goals, income or risk-taking ability can justify reassessing the portfolio even if the fund itself has not changed.

A few weeks or months of weak returns, however, may not provide enough evidence to make a decision. Bajaj suggests reviewing portfolios periodically, perhaps once or twice a year, rather than reacting to every market headline.

What should SIP investors do now?

Bajaj’s approach is straightforward. Investors should stay invested, remain disciplined and base their decisions on their financial situation rather than market sentiment.

Investors should first check whether their existing SIP is aligned with their goals and whether the monthly investment remains comfortable. They should also use the correction as an opportunity to review their emergency fund, insurance and broader financial plan.

If there is genuine surplus income, a long investment horizon and adequate financial protection, a gradual SIP step-up can be considered. But investors do not need to increase their SIP merely because the market has fallen.

“The objective isn’t to predict every turn; it is to build a strategy you can stay with through all of them,” Bajaj said.