Miss just the five best days of Nifty and you lose big

A recent analysis by Abakkus Mutual Fund reveals that even the most successful days in the Indian equity market can significantly impact long-term returns. Over a 21-year period, staying invested in the Nifty 50 TRI, for instance, yielded a CAGR of 13.67%. However, missing the market's five best days reduced this figure to 11.31%, and missing the top ten days further decreased the CAGR to 9.75%.

The discrepancy grew more pronounced as an increasing number of the market's strongest days were skipped. Investors who missed the best 30 days saw their CAGR drop to 4.68%, while those who missed the best 50 days experienced a crippling 1% CAGR. Similarly, the Nifty 100 TRI, which delivered a 14% CAGR for investors who remained invested throughout, saw its returns shrink to 11.68% when the best five days were missed, and 10.10% when the top ten days were skipped.

The Nifty Midcap 150 TRI, achieving a 17.20% CAGR when invested for the full term, saw a significant drop to 15.12% when the best five days were missed, and 13.61% when the top ten days were skipped. The Nifty Smallcap 250 TRI, with a 15.80% CAGR for full-term investors, fell to 13.83% when the best five days were missed, and 12.46% when the top ten days were avoided.

The analysis concludes that missing just a few of the market's strongest days can greatly diminish long-term CAGR, with the impact growing larger as more of the market's best days are skipped. Over 21 years, such missed opportunities proved far more detrimental than simply staying invested.