SIPs Not Linked to Rupee Weakness, Contrary to Recent Jefferies Report: Samir Arora

Indian Rupee Depreciation Intensifies Debate Over Systematic Investment Plan Inflows

The role of systematic investment plan (SIP) inflows in the sharp depreciation of the Indian rupee has become a topic of heated discussion in recent days, with some arguing that strong domestic equity flows gave foreign investors an easy exit route from Indian markets, contributing to pressure on the currency.

Veteran fund manager Samir Arora has come to the defense of retail investing through SIPs, arguing that alternative uses of household savings would not necessarily have benefited the Indian economy or the rupee. Arora suggests that if Indian retail investors had avoided SIPs, they would likely have diverted money into overseas investments, gold, discretionary consumption, or low-yield bank deposits.

A comparison of potential investment channels for Indian household savings is outlined below:

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Arora also addressed criticism surrounding FII exits and private equity selling in Indian equities. He argues that preventing FIIs or PE investors from exiting would likely have resulted in weaker market performance for existing retail investors while also reducing the attractiveness of India for future foreign investments.

The flow of capital through public markets has enabled the growth of several new-age businesses that now form a part of daily urban consumption patterns. According to Arora, if these businesses had not grown at the same rate, existing consumers would have had to take on additional responsibilities, such as cleaning their own bathrooms or shopping for groceries.

A recent note by brokerage firm Jefferies suggested that India's weak capital flows, rather than the current account deficit, were the key reason behind the rupee's decline. According to the report, strong inflows into mutual funds through SIPs and other domestic institutional channels helped absorb heavy foreign institutional investor (FII) selling over the last two years.

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Data from the Association of Mutual Funds in India (AMFI) showed that net inflows into existing equity schemes reached a record ₹38,503 crore in March 2026 and remained elevated at ₹38,410 crore in April 2026. Earlier, the previous record stood at ₹37,840 crore in October 2024.

During calendar year 2026 so far, the Indian rupee has depreciated nearly 7% against the U.S. dollar and crossed the 96 mark, making it among the weakest-performing emerging market currencies during the period.

Jefferies maintained that previous episodes of sharp rupee depreciation had often been followed by a recovery in foreign portfolio investment flows over the subsequent 12 months. The brokerage suggested that a correction in Indian market valuations, unwinding of the artificial intelligence trade, and easing geopolitical concerns around the Strait of Hormuz could potentially improve capital inflows going forward.

The discussion around SIP inflows, retail participation, and currency stability comes at a time when domestic investors have emerged as a key stabilizing force for Indian equities, helping markets withstand prolonged periods of foreign selling pressure.