SIP wave boosts markets: Retail investors keep Dalal Street steady as FIIs exit: Sanjay Shah

Retail investors continue to provide a strong counterbalance to the ongoing FII selling, with monthly SIP flows hitting record levels and maintaining stability in the domestic market, said Sanjay Shah, CMD, Prudent Corporate, in an interview with ET Now. Shah noted that despite broader market consolidation, retail confidence remains robust due to consistent SIP returns and declining alternative investment opportunities.Shah said Prudent Corporate’s SIP book has already risen from ₹980 crore in early 2025 to ₹1,100 crore now, reflecting the industry-wide increase in systematic inflows, which currently stand at ₹29,000 crore per month. “Even with modest market returns, rupee cost averaging has delivered 7-10% gains for SIP investors, keeping confidence intact,” he said.

Exposure to mid and small caps is still strong through SIPs

While new lump-sum flows are shifting more towards hybrid funds, multi-asset allocations and large and mid-cap schemes, almost a third of SIP inflows at Prudent continue to flow into small and mid-cap funds. Shah emphasized that SIP-led inflows into these segments are stable and structural in the long term.

The returns of investment funds are stable; eyes on SEBI’s upcoming decisions

Discussing sector returns, Shah said Prudent is currently earning 90.5 basis points and expects only a marginal decline of 0.5 basis points over the next year – barring any major changes in SEBI’s upcoming board meeting on December 17, where the regulator’s consultation paper on TER revisions will be reviewed.

NFO mobilization and incentives to attract new investors

Shah highlighted the strong traction in NFO mobilizations as new AMCs launch products to complement their fund baskets. About 18-20% of Prudent’s monthly new mobilization of ₹1,000 crore currently comes from NFOs.

He also expects a sharp increase in the number of new investors from February 1, 2026, when SEBI’s incentive structure — which offers ₹2,000 per new investor from B30 cities and women investors — comes into effect. “This will significantly increase retail participation in the coming year,” he added.

IPO frenzy helps, not pain

Contrary to fears that the booming IPO market is draining liquidity from mutual funds, Shah said Prudent has actually benefited. As promoters get rid of their shares through OFS and increase liquidity, that money often ends up back in the capital markets. Meanwhile, domestic mutual funds are major subscribers of new IPOs, supported by strong retail flows.

Payout ratios likely to be stable

In terms of payouts to partners, Shah said Prudent maintains a stable sharing ratio of 70:30, with 70% going to partners and 30% retained. “This is a low-margin, high-volume business, but the ratio is well accepted and should remain stable unless regulatory changes alter TER structures,” he said.