Weak stock market returns? Foreign investors continuing to sell? SIP investors have simply carried on, making their monthly investments without missing a beat.According to a recent JP Morgan report, Dalal Street having a sluggish run over the past two financial years, money has continued to flow steadily into SIPs, keeping domestic investor participation strong.The report noted that Nifty 50 delivered a two-year compound annual growth rate (CAGR) of just 0.8% in rupee terms and minus 3.2% in US dollar terms. During FY25 and FY26, foreign portfolio investors (FPIs) sold Indian equities worth around $36 billion (Rs 3.3 trillion).Despite these headwinds, retail investors continued to invest steadily through SIPs. Monthly industry SIP inflows rose 48% year-on-year to Rs 310 billion in May 2026.“Monthly industry SIP flows are up 48% to Rs 310bn ($3.3 billion) in May 2026, and cumulative equity and balanced fund net inflows were Rs 9.43tn (USD 109bn),” the report said.
Why traders have continued to pour money in SIPs
The analysis firm attributed the continued inflows to favourable tax and policy support, and expects money flowing into the capital markets ecosystem to remain strong. “The inflows should continue due to tax and policy,” the report noted. SIPs have become the main source of demand for domestic equities and account for a large share of overall industry inflows.“SIPs have become the sector’s demand anchor, contributing 77% of total equity and balanced net inflows in FY26, with monthly flows reaching Rs 310bn in May-26,” it said.The report said the persistence of SIP inflows reflects a growing “set-and-forget” approach among retail investors, who have continued investing despite market volatility and subdued benchmark returns.Apart from investment inflows, JP Morgan highlighted structural growth in trading activity across exchanges. It said that exchange volumes have expanded significantly over the years, supported by index options, weekly expiries and increased participation from retail and algorithmic traders.“Exchange volumes have scaled structurally, led by index options,” the report said.Industry average daily premium turnover rose from Rs 10 billion in FY14 to Rs 699 billion in FY26, according to the report.On stock preferences, JP Morgan said its choices are based on business-model quality, regulatory exposure and valuation metrics.“Our stock selection reflects business-model quality, regulatory exposure, and valuation; we prefer: Angel One > CAMS > ICICI AMC > NAM > HDFC AMC,” the report stated.The brokerage said that exchanges and depositories could benefit from stronger pricing power and operating leverage, while low-cost retail brokers may gain from higher scale. It added that asset management companies (AMCs), although supported by growing assets under management, could face limitations on operating leverage because of regulatory restrictions on total expense ratios (TERs).While maintaining a positive outlook on the sector, JP Morgan flagged risks including SIP inflows remaining below Rs 250 billion for an extended period, regulatory actions affecting derivatives trading activity, and a sharp increase in market volatility.“Key risks, SIP inflows staying below Rs 250 billion; adverse regulatory changes resulting in 20% lower ADPTVs or cancellation of weekly expiries; and futures/premium turnover >15% above assumptions on a sharp rise in volatility,” the report said.
