In short: In early August 2026 the Nifty 50 trades around 24,700, below the highs it touched in 2025. Portfolios opened after a year of investing look flat or mildly red, and the most common question we hear is "should I pause my SIP until things improve?" The arithmetic of rupee cost averaging says the opposite: a flat or falling market is precisely when each instalment buys you more units, and the investors who keep buying through dull stretches are the ones who own the most units when the next up-cycle arrives. Pausing now is selling the strategy at the moment it works hardest.
Where the Market Stands in August 2026
After the highs of 2025, Indian equities have spent 2026 digesting: elevated crude, global uncertainty, and an RBI that has held the repo rate at 5.25% through its recent reviews. The index sits below its peak, and a year of SIP instalments may show little visible gain. This feels like failure. It is not, it is the accumulation phase doing its job quietly. Valuations are near long-term averages rather than at euphoric extremes, which historically has been a reasonable, even attractive, environment for systematic buying.
The Unit Math: Why Falling Prices Help an Accumulator
A SIP is a fixed rupee amount, so the number of units it buys moves inversely with price. Take a ₹10,000 monthly SIP into a fund whose NAV moves from ₹100 to ₹90 to ₹80:
| NAV | Units bought with ₹10,000 | vs. buying at ₹100 |
|---|---|---|
| ₹100 | 100.0 | — |
| ₹90 | 111.1 | +11% more units |
| ₹80 | 125.0 | +25% more units |
Every instalment invested below your average cost pulls that average down, which means the NAV does not need to reclaim its old high for your portfolio to break even, and anything beyond that point is profit on a larger pile of units. This is why long-run SIP studies keep finding that investors who continued through the 2020 crash earned dramatically better XIRRs than those who paused for a few months: the paused investors skipped exactly the instalments that were bought cheapest.
For perspective on scale: ₹10,000 a month for 10 years is ₹12 lakh invested, and at an illustrative 12% annual return compounds to roughly ₹23.2 lakh; at 10% it is about ₹20.7 lakh. Returns are never guaranteed, but the engine that produces them, units multiplied by future NAV, is built during the boring years, not the euphoric ones.
The Behaviour Gap: Where SIP Returns Are Actually Lost
Fund returns and investor returns are not the same number. Studies of investor behaviour repeatedly find actual investor XIRRs lagging the funds they invest in by a wide margin, and the gap is almost entirely behavioural: starting SIPs after rallies, pausing them during corrections, and redeeming near bottoms. The SIP's whole design purpose is to remove those decisions. A paused SIP quietly converts a mechanical strategy back into a market-timing strategy, run by the same instincts that mistime markets everywhere.
The honest question to ask before pausing: "will I reliably restart at lower prices?" Almost nobody does, because the news at lower prices is always worse than the news today.
When Changing Your SIP Is Actually Justified
None of this means a SIP is untouchable. Legitimate reasons to modify one:
- Your cash flow changed. Job loss or an income squeeze is a real reason to reduce the amount, do that rather than stopping entirely if you can.
- Your goal is now near. Money needed within 2–3 years should be moving out of equity anyway, via an STP or rebalancing, regardless of market level.
- The fund itself has deteriorated, persistent underperformance versus its category across multiple years, a strategy drift, or a manager exit you researched. Switch funds, keep the SIP.
- Your allocation is off target. If equity has grown far beyond your intended split, rebalance deliberately, not by pausing contributions in fear.
"The index is below its high" appears nowhere on that list.
A Practical Plan for a Sideways Market
- Automate and stop watching monthly. Review annually against your goal, not daily against the index.
- Step up instead of pausing. If your income rose this year, a 10% step-up buys disproportionately many units at today's prices.
- Check your horizon honestly. Equity SIPs are for 7+ year goals; if yours is shorter, the fix is asset allocation, not timing.
- Use the dull stretch for hygiene: consolidate scattered folios, verify nominations, and confirm your funds still fit your plan.
- Get one professional review if doubt is making you tinker, a written plan beats willpower every time the market goes quiet.
Bull markets pay the accumulator's reward; flat markets are where it is earned. Read the companion piece from the other side of this cycle, should you keep your SIP running at market highs, and notice the answer is the same in both directions: keep buying, on schedule, until the goal says otherwise.
Frequently Asked Questions
Should I stop my SIP because the Nifty is below its 2025 highs?
For long-term goals, no. A fixed monthly SIP buys more units when prices are lower, which reduces your average cost and enlarges the unit base that benefits when markets recover. Pausing skips exactly the cheapest instalments, and most investors who pause do not manage to restart at lower prices.
Why does my SIP show almost no gain after a year of investing?
In a flat or falling market, recent instalments are worth close to what you paid, so the portfolio looks stagnant even though the strategy is working. The accumulation phase builds units, not visible profit; the payoff appears when NAVs eventually rise on the larger unit base. Judge a SIP over full market cycles, not single years.
Is it better to pause a SIP and invest a lump sum later at the bottom?
Only if you can reliably identify the bottom, which research on investor behaviour suggests almost nobody does. The behaviour gap, buying after rallies and stopping during declines, is a major reason investor returns lag fund returns. A continued SIP automates buying through the low prices a market-timer hopes to catch.
When is it actually sensible to change or stop a SIP?
When your cash flow genuinely cannot support it, when the goal is now within 2 to 3 years and the money should be de-risked, when the specific fund has persistently underperformed its category and peers, or when your overall asset allocation needs a deliberate rebalance. The level of the index by itself is not a reason.
What return should I assume from an equity SIP in India?
Long-run planning commonly assumes around 10 to 12% annually for diversified equity funds, reflecting historical experience, but this is an assumption, not a promise. Mutual fund investments are subject to market risk, and actual returns vary widely across periods, which is precisely why a long horizon and continued instalments matter.
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Finvastra is a financial advisory firm based in Hyderabad, Telangana. We advise individuals and businesses on home loans, business loans, loan against property, MSME financing, wealth management, and insurance, working as the client's representative, not as an agent of any lender. We have facilitated over ₹2,000 crore in financing across Hyderabad and Telangana.