A significant transformation is underway in how Indian retail investors approach the stock market. Moving away from the traditional method of deploying large sums at once, a growing majority is now embracing Systematic Investment Plans (SIPs) as their preferred route to build wealth in equities. This shift underscores a more mature, disciplined investment mindset aimed at navigating ongoing market uncertainties linked to geopolitics and trade tensions.
The Numbers Tell the Story: SIPs Surge, Lumpsum Retreats
Data from the Association of Mutual Funds in India (AMFI) reveals the scale of this change. In the calendar year 2025, SIPs accounted for approximately 35% of net inflows into equity-oriented mutual funds, translating to a substantial Rs 3 lakh crore. This marks a sharp rise from 2024, when SIPs constituted about 25.36% (roughly Rs 2.68 lakh crore) of such inflows. The momentum is also visible on a monthly basis, with SIP contributions in December 2025 reaching Rs 31,002 crore, reflecting a year-on-year growth of over 17%.
Conversely, the appetite for one-time lumpsum investments has cooled. Provisional figures indicate that lumpsum investments into mutual funds fell by around 27% year-on-year in 2025 to Rs 5.6 lakh crore till November. Their share of the total pie consequently declined to 65% in 2025 from nearly 74% in the preceding year. Market experts attribute this to investor wariness in the face of heightened volatility and the challenge of timing the market correctly with a large sum.
Why SIPs Are Winning Investor Confidence
Several interconnected factors are driving this structural shift in investor behaviour. The primary appeal of SIPs lies in their inherent discipline and the financial principles they leverage. By investing a fixed amount regularly, investors benefit from rupee cost averaging—buying more units when prices are low and fewer when they are high—which lowers the average cost per unit over time. This strategy, combined with the power of compounding, offers a smoother path to long-term wealth creation without the need to predict market movements.
A. Balasubramanium, MD & CEO of Aditya Birla Sun Life Mutual Fund, notes that investors have become more disciplined. "A bull market only comes once in a while... in the current uncertain market and geopolitical conditions, SIPs provide the safest way for long term wealth generation," he stated. This approach has successfully attracted a new wave of first-time investors into the mutual fund ecosystem.
Furthermore, macroeconomic conditions play a role. While long-term prospects for Indian equities remain bullish, supported by strong GDP growth and low inflation, the short-term outlook is clouded by uncertainty. Key indices like the Nifty 50 have been range-bound between 25,800-26,300 points since late October, while the Sensex has fluctuated in the 84,000-85,500 band. Factors such as the delayed India-US trade deal, rupee volatility, and questions about corporate earnings growth have fostered caution, making SIPs a preferred tool to spread risk.
Broader Economic Undercurrents Fueling the Trend
The shift towards SIPs is also reinforced by ground-level economic realities. Sluggish wage growth has limited the immediate impact of positive policy measures like GST cuts and increased income tax exemption slabs. According to Aon's Annual Salary Increase and Turnover Survey, salaries in corporate India are expected to rise by a modest 9% in 2026, largely flat compared to 2025. When adjusted for inflation, real wage growth appears even more muted.
"In such a situation, where savings are constrained due to stagnant salaries, it is far more convenient for investors to start SIPs than to deploy a large chunk of capital at once," explained an analyst tracking the sector. This accessibility has made SIPs a cornerstone of retail participation, providing a stable and predictable flow of investments that has powered the industry's growth. The mutual fund industry's average assets under management witnessed nearly 20% year-on-year growth, crossing Rs 81 lakh crore as of November 2025.
As Dhirendra Kumar, founder and CEO of Value Research, pointed out, while AMFI highlights SIP collections, the remaining inflows are not explicitly tagged as 'lumpsum'. He added that equity-focused funds serve as a better barometer for SIP trends, as gross inflows also include large institutional investments in debt avenues. The clear message from the data is that the Indian retail investor is evolving, choosing systematic, long-term planning over timing the market, thereby deepening the roots of the country's capital markets.
