The monthly pattern is the more telling detail. Contributions crossed Rs 26,000 crore in the very first month of the fiscal, reaching Rs 26,632 crore in April 2025, and climbed steadily from there. December 2025 and January 2026 set a then-record of Rs 31,002 crore. Then came March 2026 - the same month in which the Nifty 50 fell 11.31%, its steepest monthly decline since March 2020 - and SIP contributions rose to an all-time high of Rs 32,087 crore.

Part of that resilience is generational. According to a review compiled by HDFC Securities, the share of stock-market investors below the age of 30 rose from 22.6% in March 2019 to 38.4% by February 2026, alongside a broader rise in demat accounts to roughly 21-22 crore nationally - a cohort that industry commentary generally links to digital-first onboarding and a preference for automated, recurring investment over discretionary stock-picking, which fits naturally with the SIP format.

Widening that base further is a specific policy push. AMFI, working with SEBI, introduced “Choti SIP” - a systematic investment plan with a minimum monthly contribution of Rs 250 - reportedly launched at an event attended by the SEBI chairperson specifically to reach first-time investors who might otherwise find conventional SIP minimums out of reach. As described in industry trade coverage, the product carries a minimum five-year (60-instalment) commitment, is capped at three such SIPs per investor across three fund houses, and is restricted to growth-plan equity schemes outside the sectoral, thematic, mid-cap and small-cap categories - with distributors reportedly eligible for a modest incentive once an investor completes 24 instalments, an inducement designed to make it worth an adviser’s time to bring in small first-time savers rather than only larger tickets.

The number of contributing SIP accounts rose to 9.72 crore in March 2026, from 8.11 crore a year earlier - a net addition of 1.61 crore active accounts. SIP assets under management reached Rs 14.83 lakh crore, maintaining a 20% share of total industry AUM (20.11%, against 20.09% a year earlier).

Perhaps the more interesting evidence of investor patience sits in the holding-period data. Within direct plans, the share of SIP assets held for more than five years rose to 20% in March 2026, from 19% a year earlier, while the share held for less than a year contracted to 29%. Regular plans - where an intermediary or adviser is typically involved - show an even more pronounced long-term tilt: 34% of SIP AUM held for more than five years, against just 19% held for under a year. Both India’s top-30 cities and the rest of the country recorded the same rising share of assets held beyond five years between March 2025 and March 2026, with B30 towns showing marginally higher long-term holding shares than the metros throughout - a reminder that patience is not solely a big-city phenomenon.

Sources:

• AMFI Annual Report: Fiscal 2026

• Cafemutual, “AMFI launches choti SIP or Rs.250 SIP” - https://cafemutual.com/news/industry/34255-amfi-launches-choti-sip-or-rs250-sip

• Cafemutual, “All you need to know about the newly launched Choti SIP” - https://cafemutual.com/news/industry/35491-all-you-need-to-know-about-the-newly-launched-choti-sip

• HDFC Securities (Big Review, via HDFC Sky), “Retail Participation Soars as Demat Accounts Hit Record” - https://hdfcsky.com/blogs/media-coverage/retail-participation-and-liquidity-trends-reshape-market-structure

The Nifty 50 Value 20 selects 20 supposedly cheap stocks from the Nifty 50, India’s blue-chip benchmark, and is tracked by six exchange-traded funds and index funds, together holding roughly ₹14.5bn (about $153m at current exchange rates) in net assets:

Nippon India’s index fund alone accounts for more than 60% of the total; the rest is split across smaller offerings from HDFC, ICICI Prudential and Kotak. On June 10th NSE Indices announced that the entire stock-selection formula behind the index would change, alongside its rebalancing schedule and the way it weights its constituents. The revision brings the Nifty 50 Value 20 into line with the Nifty 200 Value 30, a sister index with a wider, mid-cap-inclusive universe that already used the new approach. The result, effective from June 30th, is a meaningfully different index wearing the same name, and one that every rupee in those six funds is now obliged to follow.

What changed, in the accounting

The old formula scored each stock on four factors: return on capital employed (40% of the score), the price-to-earnings ratio (30%), the price-to-book ratio (20%) and dividend yield (10%). It also required stocks to comply with insurance-regulator dividend norms, a small but specific filter. The new formula drops that filter entirely and replaces the old ratios with four different ones, each weighted equally at 25%: earnings-to-price, sales-to-price, book-to-price and dividend yield.

This is a more substantial change than swapping one ratio for another. Return on capital employed measures how efficiently a company turns capital into profit; it says nothing about price. Earnings-to-price and book-to-price, by contrast, are inverted versions of the price-to-earnings and price-to-book ratios already in use, just expressed as yields rather than multiples. Sales-to-price is genuinely new to this index, screening for revenue generated per rupee of market value, a metric that tends to favour low-margin, capital-intensive businesses such as commodity producers and utilities over asset-light ones such as consumer brands or software firms. Dropping return on capital employed removes the only factor that had anything to do with how well a business is actually run; the new four-factor set is concerned purely with how cheap a stock looks relative to its fundamentals, with no allowance for the quality of those fundamentals.

The weighting change compounds this. Under the old scheme, return on capital employed counted for nearly half the score, meaning a company had to be both profitable and statistically cheap to qualify. Under the new scheme, all four ratios count equally, which mechanically gives more weight to a single cheap statistic, since no other measure can offset it. A stock with a rock-bottom price-to-book ratio because the market suspects its assets are about to be written down can now score just as well as one that is cheap and fundamentally sound.

Three further changes accompany the scoring overhaul. The number of stocks guaranteed a place in the index regardless of score, the “compulsory inclusion” list, doubles from the top five to the top ten, which loosens the index’s grip on its highest-scoring names and makes the bottom half of its 20 holdings more sensitive to the new formula. The review and rebalancing calendars, previously annual and quarterly respectively, both move to a shared semi-annual cycle in June and December, which means the index will be reconstituted less often than before. And the weighting methodology shifts from plain free-float market capitalisation to what NSE calls “tilt” weighting, multiplying free-float market capitalisation by the value score, so a company that is both large and cheap by the new metrics gets a disproportionately larger slice of the index than its market value alone would justify.

The reshuffle that followed

The practical effect showed up immediately in the index’s holdings. Bajaj Auto, Cipla, Dr Reddy’s Laboratories, Maruti Suzuki and Tech Mahindra were dropped; Bajaj Finserv, Grasim Industries, HDFC Bank, Reliance Industries and Tata Steel took their places. None of those exits were forced by any change in the companies’ underlying business. They left because a different formula, applied to the same set of companies on the same day, produces a different ranking. That is the clearest illustration of what a methodology change actually does: it does not discover new information about which companies are cheap, it redefines what “cheap” means.

The case for the change

The strongest argument for the new approach is consistency. With the Nifty 50 Value 20 and Nifty 200 Value 30 now sharing one formula, NSE has a single, simpler story to tell investors about what “value” means across its suite of indices, rather than maintaining two competing definitions that could, in principle, recommend opposite things about the same stock. Earnings-to-price and book-to-price are also more conventional value metrics internationally than return on capital employed, which is more commonly associated with quality-factor investing; aligning with standard usage makes the index easier to benchmark against global value indices and academic factor research. The shift to semi-annual rebalancing, meanwhile, should reduce portfolio turnover and the trading costs that come with it, a genuine benefit for anyone holding the index through a fund.

The case against

The drawbacks are not trivial. Removing return on capital employed strips out the index’s only check on business quality, leaving a pure-price screen that is more exposed to value traps, companies that are cheap because the market has correctly priced in genuine trouble, not because it has made a mistake. Equal-weighting the four remaining ratios, rather than letting profitability dominate as before, makes that risk somewhat more acute: a structurally troubled company can no longer be filtered out by a poor score on capital efficiency, since that factor is no longer part of the test. The doubled compulsory-inclusion list and the new tilt-weighting scheme also mean the index’s composition is now less purely a function of valuation and more a function of size multiplied by valuation, which can quietly increase concentration in already-large stocks. And the move to less frequent rebalancing cuts both ways: lower turnover is good for costs, but it also means the index reacts more slowly when a stock’s genuine value characteristics change, whether for better or worse, leaving investors exposed to a stale snapshot for longer between reviews.

None of this makes the new methodology wrong. It is a coherent, internationally conventional way to define a value index, and it is now consistent across two of NSE’s products rather than one. But anyone holding a fund that tracks the Nifty 50 Value 20 should understand that the index they own changed in substance on June 30th, not just in its list of holdings. The ratios behind the name, not merely the names inside it, are what determine what kind of “value” an investor is actually buying.

At the heart of the directive is a simple concern: CRAs increasingly rate products governed by banking, insurance, or housing regulators, yet investors often treat those ratings as if they fall under SEBI’s protective umbrella. The new framework forces agencies to clearly separate these activities—digitally, financially, and contractually.

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Operational Separation Becomes Mandatory

CRAs must now create distinct channels for grievances. The circular states that agencies “shall handle grievances related to SEBI regulated activities and grievances related to activities under the purview of other FSR(s) through distinct and separate email IDs” and must maintain “separate webpages or sections on their website for disclosures” . Shared infrastructure is permitted, but communication lines must be unambiguously divided.

Financial safeguards have also been strengthened. Any rating work for other regulators cannot dilute SEBI’s net-worth requirements. Agencies must ensure that external mandates do not erode the capital buffer prescribed under SEBI regulations, and any additional net-worth conditions imposed by other regulators will be over and above SEBI norms.

Sharper Labelling in Rating Reports

Perhaps the most visible change will appear in rating rationales and press releases. Every report must now name the regulator overseeing the instrument and explicitly warn that SEBI’s investor-protection mechanisms do not apply. Where a single document covers both SEBI and non-SEBI products, the CRA must provide “a clear segregation and labelling of SEBI regulated instruments and instruments falling under the regulatory purview of other FSR(s).”

Marketing material faces similar restrictions. Advertisements for non-SEBI activities must be distinct, carrying a prominent disclaimer that SEBI’s grievance redressal framework will not be available.

Tighter Client Engagement

Before starting any non-SEBI assignment, CRAs must give clients written disclosure explaining the regulatory status and obtain confirmation that the client understands the associated risks. Existing clients are to receive similar intimation, and agencies must certify compliance to SEBI. Internal audits will need to carry a board-approved undertaking confirming adherence to these conditions.

Most provisions will apply after 60 days, while the segregation of grievance channels and communication with legacy clients has a 12-month transition.

What This Means for Investors

The changes are less about credit quality and more about regulatory clarity. Investors frequently assume that every rating issued by a SEBI-registered CRA enjoys identical oversight. That assumption will no longer be tenable.

1. Better Transparency, Fewer Misunderstandings
   Investors will see explicit labels identifying which regulator governs a particular instrument. This reduces the risk of buying a product under the mistaken belief that SEBI’s dispute-resolution mechanisms apply.

2. Due Diligence Becomes Crucial
   For bonds or instruments rated under the purview of other regulators, investors must evaluate grievance avenues, compensation frameworks, and supervisory standards separately. The rating symbol may be familiar, but the investor protections may differ materially.

3. Lower Reputational Spillovers
   By ring-fencing operations, the move prevents problems in non-SEBI segments from contaminating the credibility of SEBI-regulated ratings. That should strengthen confidence in mainstream corporate bond markets.

4. Short-Term Friction, Long-Term Trust
   Agencies will incur compliance costs and operational restructuring. In the near term, this could slow issuance of hybrid or specialised instruments. Over time, clearer rules should improve pricing discipline and investor trust.

The message is unmistakable: a rating is not a universal passport. Investors must read the fine print on who regulates the product behind the grade.

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Source: This article is based on the SEBI circular dated February 10, 2026 titled “Obligations on CRAs while undertaking rating of financial instruments falling under the purview of any other Financial Sector Regulator.”

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— To read the full circularclick here.