Page 29 - Banking Finance May 2025

ARTICLE

How missing the

best days in

markets impacts

your returns 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.

T he Indian stock market has demonstrated remark- spite a -19% drawdown during the year. Similarly, in CY
2020, the index was up 16% despite a significant -38% in-
able resilience over the years, if we look at the his-
torical performance of the BSE Sensex and the Nifty
Midcap 100 indexes. tra-year decline.
BSE Sensex Return
Over the years, the Indian market has witnessed many
events like the dotcom bubble, 2009 financial crisis and the Intra Year Declines Number of Calendar Years
2020 COVID virus induced fall. with Positive Returns
0 to < -10% 4 out of 36
Despite experiencing significant intra-year declines, both
indices have predominantly ended with positive returns over -10% to < -20% 23 out of 36
the long term. This resilience underscores the robustness of > -20% 9 out of 36
the Indian economy and the potential for growth in its eq-
CY1980-2025 YTD. As of Jan 31, 2025.
uity markets. More importantly, it shows that long term
investors who remain focused on their goals eventually end
In the above table, we can see that even if the Sensex wit-
up with positive results.
nessed a decline of up to -10%, in 4 out of 36 years, you
would have earned positive returns in those calendar years
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 (Jan 1-Dec 31).
of 45 years. Even in these positive years, the index experienced
Similarly, in the second instance, even if the intra year de-
intra-year declines ranging from -10% to more than -20%.
cline is in the range of -10% to -20%, in 23 out of 36 years,
For instance, in 1985, the Sensex delivered 94% return de- you earn a positive return. Lastly, even if the decline is more

26 | 2025 | MAY | BANKING FINANCE