The central question, then, is whether market timing meaningfully improves outcomes for long-term investors. Data across market cycles suggests it rarely does. In fact, obsessing over entry points often matters far less than staying invested over time. Missing even a handful of strong market days while waiting on the sidelines can significantly dent long-term returns.
Against this backdrop, data from multiple fund houses offers a clear perspective on whether waiting for corrections actually pays, or whether time in the market consistently trumps timing the market.
What the numbers say
We examined several data analyses by fund houses tracking the Nifty 500 Index, which represents the broader equity market.
An analysis by DSP Mutual Fund showed that regardless of when systematic investment plans (SIPs) were initiated, long-term returns tended to cluster within a narrow range, with a differential of about few percentage points. The study looked at seven-year rolling SIP returns on the Nifty 500 Index TRI between 1 April 2005 and 30 November 2025. The TRI, or Total Return Index, captures both price gains and dividends.
For instance, median seven-year rolling SIP returns started from the market high were 13%. Median seven-year rolling SIP returns after index rallied more than 20% in one-year period was 14%, while it was 12% if SIPs were started after index fell more than 20% in one-year period.
Returns after corrections were lower largely because markets tend to mean revert after sharp falls. SIPs started during post-recovery phases initially buy units at higher levels, resulting in fewer units for the same investment. Conversely, when markets correct after sharp rallies, SIPs initiated during the correction phase buy more units at lower prices. Median returns were used instead of averages to avoid distortion from outliers.
Mutual fund investors can invest through systematic investment plans (SIPs), which allow monthly investments and help lower the average cost over time by accumulating more units during market downturns.
Another study by Capitalmind Mutual Fund looked at the period from January 1995 to August 2025, looking at the same Nifty 500 Index. The study assumed three type of investors that put ₹1 lakh once each every calendar year into the Nifty 500 Index, with the dividends reinvested.
The “lucky” investor bought each year at the market’s lowest point. The “unlucky” investor invested at the year’s highest point. A “regular” investor invested on the first trading day of each year. In addition, a group of 10,000 investors invested on a randomly chosen trading day each year.
The lucky investor earned 16% annualized returns. The regular investor earned 14.7%, while even the unlucky investor—who entered at the peak every year—earned 13.7%. Among the 10,000 investors who picked a random day each year, 90% of returns fell within a narrow 14.7-15.3% range.
View Full Image
Time versus timing
The broader takeaway from these studies is consistent: instead of trying to time the market, investors are better served by staying invested for longer periods.
“If an investor believes they have identified a capable fund manager, the sensible approach is to invest steadily—either through staggered purchases or systematic investment plans—without getting overly influenced by short-term price movements. The real payoff from such an approach comes from staying invested over long periods. This strategy requires patience, as consistency and time are most important factors that can influence the outcome of your equity investments,” says Kaustubh Belapurkar, director – manager research, Morningstar India.
Data from PGIM India Mutual Fund reinforces this point. An analysis covering 4 September 2001 to 31 December 2025 showed that investors who stayed fully invested in the Nifty 500 TRI earned 17.3% annualized returns over the period. Missing just the 10 best days would have reduced returns to 13.7%. Missing 30 best days would have cut returns to 8.8%, while missing 50 best days would have dragged returns down to 4.7%.
“It is not possible for investors to know when and how these best months will play out. Hence, investors can capture the best days by keeping a longer investment horizon,” pointed out Abhishek Tiwari, chief executive officer of PGIM India Mutual Fund.
Another long-term analysis of the Nifty 50 since inception, since June 1999, found that nearly 70% of the time, the index delivered more than 12% returns on a seven-year rolling basis, according to FundsIndia. The returns were as on 30 November 2025.
“SIPs are one of the simplest ways to handle equity volatility because they put time in the market to work, instead of forcing you to get timing right. Think of them like a recurring deposit in a market-linked product: you keep investing through ups and downs, automatically buying more when markets are weak and less when they’re expensive. Even if returns look muted for a while, SIPs are quietly doing their job of averaging your cost and improving your long-term entry price. And in equities, it often takes just one strong upcycle for patient SIP investors to see the payoff,” explained Dhirendra Kumar, founder and chief executive officer of Value Research, an independent investment advisory firm.
Conclusion
Rather than attempting to time market entry, investors may be better served by focusing on building diversified portfolios across asset classes with low correlation to one another. Such diversification can help cushion portfolio returns when one asset class underperforms.
Periodic rebalancing is another discipline that helps investors stay aligned with their long-term asset allocation and risk profile. “The rebalancing exercise indirectly increases exposure to asset classes that have undergone a correction while trimming allocations to those that have seen sharp rallies. This process instils discipline and keeps the portfolio aligned with the investor’s long-term goals and risk profile,” said Kavitha Menon, founder of Probitus Wealth.
About the Author
