How missing the best days in markets impacts your returns

The Indian stock market has demonstrated remarkable resilience over the years, if we look at the historical performance of the BSE Sensex and the Nifty Midcap 100 indexes. Over the years, the Indian market has witnessed many events like the dotcom bubble, 2009 financial crisis and the 2020 COVID virus induced fall.

- Abhishek Tiwari ED & Chief Business Officer PGIM India Asset Management Pvt. Ltd.

The Indian stock market has demonstrated remarkable resilience over the years, if we look at the historical performance of the BSE Sensex and the Nifty Midcap 100 indexes.

Over the years, the Indian market has witnessed many events like the dotcom bubble, 2009 financial crisis and the 2020 COVID virus induced fall.

Despite experiencing significant intra-year declines, both indices have predominantly ended with positive returns over the long term. This resilience underscores the robustness of the Indian economy and the potential for growth in its equity markets. More importantly, it shows that long term investors who remain focused on their goals eventually end up with positive results.

If you look at the calendar year returns of BSE Sensex for the last 45 years, the index has delivered positive returns in 36 out of 45 years. Even in these positive years, the index experienced intra-year declines ranging from -10% to more than -20%.

For instance, in 1985, the Sensex delivered 94% return despite a -19% drawdown during the year. Similarly, in CY 2020, the index was up 16% despite a significant -38% intra-year decline.