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If your SIP still fits a long-term goal, you can afford its instalments, and you remain comfortable with the scheme’s risk, continuing during a downturn may help you stick to your plan and buy more units when the NAV is lower. But an SIP does not guarantee a profit or prevent losses. If you need the money soon, or your finances or risk tolerance have changed, reassess before continuing.
What continuing an SIP does in a falling market
An SIP, or systematic investment plan, is a way to invest a fixed amount in a mutual fund scheme at regular intervals rather than investing a lump sum. Because each instalment buys units at that date’s net asset value (NAV), the same contribution buys more units when the NAV is lower and fewer when it is higher. AMFI calls this rupee cost averaging and says it can support disciplined investing without trying to time market movements: AMFI’s SIP explainer.
That arithmetic does not make a falling investment safe. AMFI explicitly warns that rupee cost averaging “does not assure profit, nor does it protect one against investment losses in declining markets.” A mutual fund’s NAV can fall, and you can lose principal; past performance does not guarantee future performance. See AMFI’s mutual fund risk information.
A hypothetical illustration—and its limit
In a hypothetical six-month example published by the National Institute of Securities Markets (NISM) on July 7, 2025, investing ₹10,000 monthly totals ₹60,000 and buys 3,334.1 units at an average acquisition cost of ₹18. At the example’s December NAV of ₹16.5, the holding is worth ₹55,013—less than the amount contributed. The illustration shows how an SIP can accumulate more units as prices fall while the investment’s value still declines; it does not predict what any fund or market will do. NISM
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Decide based on your plan, not the market headline
A market decline alone cannot tell you whether to keep or stop a particular SIP. Review the investment against your circumstances and the scheme’s suitability. SEBI advises investors to choose investments according to their objectives and risk appetite, and to review whether their portfolio continues to match their needs. Its guidance also cautions against taking equity risk with money needed in the short term. See SEBI’s investor education resources.
- Goal timing: When will you need this money? Equity-market volatility may be inappropriate for a near-term goal.
- Scheme suitability: Does the scheme’s risk still fit your objective and risk tolerance? A downturn is a prompt to review, not proof that you should either stay invested or exit.
- Ability to pay: Can you make each contribution without borrowing or compromising essential expenses and nearer-term obligations? SEBI advises against borrowing to invest.
- Capacity for further losses: Are you prepared for the possibility that the investment may fall further, without assuming that averaging guarantees a recovery?
When to reconsider or get personal advice
Reassess the SIP if the goal has moved closer, you need the money sooner than expected, the contribution is straining your budget, or the scheme no longer matches your objective or tolerance for loss. Those changes matter more than the fact that markets have fallen. If the right decision depends on your personal finances or scheme selection, SEBI says you may consult a SEBI-registered Investment Advisor. This is general education for the Indian mutual fund context, not a recommendation about a particular fund or investor.
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Historical market declines are not a forecast
NISM reported that from the Nifty 50’s September 2024 peak through March 13, 2025, the index fell 14.6%. Over that same period, NISM reported declines of 17.6% for the Nifty 500, 20.4% for the Nifty Midcap 150, and 24.3% for the Nifty Smallcap 250. These are historical figures for that stated period, not current drawdowns and not evidence that any particular fund will recover on a schedule. The figures appear in NISM’s July 7, 2025 article: NISM.
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