Trying to time the market? Missing the best trading days can dent returns

Mumbai: Trying to time the market may not be the best strategy for retail investors. A study by Abakkus Mutual Fund shows that missing even a few of the market’s strongest trading days can erode long-term returns. The asset manager analysed the Nifty 50 TRI, Nifty Midcap 150 TRI, and Nifty Smallcap 250 TRI performances over the 21 years from April 2005 to May 2026 and found that investors who stayed invested throughout generated the highest returns.

Those who remained invested in the Nifty 50 for the entire period earned 13.6%, while returns were 17.18% for the Nifty Midcap 150 and 15.8% for the Nifty Smallcap 250.

However, investors who remained out of the market during the best 50 trading days saw their returns shrink to 0.89% in the Nifty 50, 5.65% in the Nifty Midcap 150 and 4.87% in the Nifty Smallcap 250.

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“Investors who want to time markets need to make two correct decisions: deciding when to get in and subsequently when to exit,” says Anup Bhaiya, MD and CEO, Money Honey Financial Services. “Getting one of these wrong could lead to significant loss in long-term returns.”

Returns improved to 4.59%, 9.16% and 8.22%, respectively, if they missed the best 30 trading days, and to 9.67%, 13.58% and 12.44%, respectively, if they missed the best 10 trading days, the study showed.

“Timing tries to bring in rationality, but markets are not rational, both on the upside and downside. Coupled with investors’ greed and fear, it could often result in suboptimal returns,” says Vineet Nanda, Founder, SIFT Capital.