Edelweiss Mutual Fund CEO Radhika Gupta highlighted the difficulty of timing the stock market in light of the sharp rally seen in Indian equity indices today, May 12.

Indian benchmark indices – Sensex and Nifty 50 – rallied over 3.5% each in trade today to post the best single-day gains in over four years. This rally also added ₹16 lakh crore to investor wealth, as India’s market capitalisation reclaimed the $5 trillion mark. This rally came amid a deal between the US and China and the India-Pakistan ceasefire.

Against this backdrop, Radhika Gupta, in a post on social media platform X, on Monday, stressed the need to stay invested and stay patient, as such good days make up for a large part of yearly returns.

Gupta said, “While there are proponents of taking cash calls, days like this remind you how difficult market timing – both entry, exit and re-entry – for individuals and fund managers are. A large part of a year’s returns come from a few critical days, and those are hard to predict.”

For us “dumber” investors, staying invested and staying patient is the easier and more effective thing to do!, Gupta added.

Gupta believes that holding on to your investment and being patient is the most effective and easiest way to earn returns. This holds true in the light of the resilience exhibited by the Indian stock market in the face of a global trade war and conflict with Pakistan.

Had investors fled the stock market amid these fears, they could have missed out on earning such strong gains.

Timing the market

According to an analysis by Gurmeet Chadha of Complete Circle, if an investor misses out on the 10 best days of the market, then their returns can decline by 50% in the 20-year period.

Additionally, he said in a post on X, missing out on the best 15 days can cost you dearly, as your returns can be reduced by 65%.

He added that timing the stock market has two legs – exit and re-entry. “The 2nd leg is where most people get it wrong!!”

Over the last 10-year period, the Indian stock market’s flagship index, the Nifty 50, has delivered a compounded annual growth rate (CAGR) of 11.7%, highlighting the benefits of long-term investing. Over a five-year period, Nifty50’s CAGR is 22%.

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