Deepak Shenoy, Capitalmind CEO, offered his point of view on the long-drawn SIP versus FIIs debate and said that it is a "weird" call to stop domestic investments through mutual funds to curb foreign institutional investor outflow.
"I disagree with the notion that SIPs and domestic equity investors are what creates a negative in that foreign investors will leave," he said in a post on X.
The comments seem to be a retort to market veteran Shankar Sharma's hot take on SIPs enabling FII outfow that he had shared in the month of April. Foreign Portfolio Investors have offloaded Indian equities worth 2.27 lakh crore so far in 2026.
In a post on X, the founder of GQuant Investech had argued that the wealth management industry is misreading the reasons behind foreign investor exits. “I don't understand why the entire wealth & money management industry is unable to understand why FIIs are exiting,” Sharma said, before pointing to systematic investment plan (SIP) inflows as the key driver.
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In his view, the steady and large inflows from domestic investors via SIPs are effectively providing liquidity for FPIs to offload their holdings.
The Capitalmind CEO pointed out that if all they were looking for is liquidity, then it's fine, they have it now, and they're leaving; but it's only a market that gives you the freedom and liquidity to leave that attracts future inflows.
"'Stopping SIP' is a weird way to say that we'll reverse the flows - it just almost ensures that new flows won't enter," Shenoy highlighted.
Elucidating on his take, Shenoy said there are many companies where a "premium" was given primarily due to lack of liquidity.
"Promoters owned too much, and the rest was with a controlled set of people, including FPIs, and those stocks wouldn't hurt too badly when markets fell," he highlighted, adding that this stuff should and will dissolve over the years. "The illiquidity premium shouldn't be a thing, but it is, and it won't last very long," the SEBI registered portfolio manager underlined.
He went on to argue that investing in India is what's made a lot of Indians richer and that is what drives forward more of the domestic economy.
ALSO READ: 'Easy To Be Cynical': Radhika Gupta Rebuts Shankar Sharma's 'Brainwashed' Jibe At SIP Investors
"It's the combination of investment returns and spending that will drive our GDP (we aren't export oriented) and in fact, it's our consumption that should drive more production domestically though it's not yet meaningfully happened yet," he stated.
Shenoy drew some interesting parallels to drive his point home with how shifting to electronic vehicles, using more GLP-1, and smoking less may hurt certain industries, but is beneficial to our health in the long-term.
In the same way he concluded, more SIP isn't bad for India even if it allows more free outflows, in the longer term as it creates a richer India and "already has",
"The benefits of that will mean both greater longer term inflows and more domestic participation in an environment that requires investment," Shenoy undercored.
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