While little Johnny has started investing in Nifty Index Fund now, his elder brother was more prudent and analytical. He studied whatever data he had and decided to follow the approach of investing a lump sum every year on Nifty index funds. He saved Rs. 1000 every month and invested the saved Rs 10000 into He has been diligently doing that since 1997. Here are his results.
Case 1: Invest on a day when the market was high for that month
| Year |
Jan |
Feb |
Mar |
Apr |
May |
Jun |
Jul |
Aug |
Sep |
Oct |
Nov |
Dec |
| 1997 |
96
|
98
|
88
|
93
|
94
|
84
|
81
|
77
|
86
|
84
|
92
|
93
|
| 1998 |
92
|
94
|
87
|
82
|
84
|
95
|
100
|
110
|
107
|
114
|
114
|
111
|
| 1999 |
101
|
102
|
93
|
94
|
85
|
82
|
74
|
70
|
71
|
66
|
71
|
67
|
| 2000 |
61
|
57
|
58
|
62
|
70
|
66
|
65
|
72
|
68
|
77
|
79
|
74
|
| 2001 |
72
|
71
|
74
|
87
|
83
|
87
|
90
|
93
|
95
|
101
|
93
|
90
|
| 2002 |
90
|
84
|
84
|
87
|
89
|
91
|
92
|
99
|
99
|
103
|
95
|
91
|
| 2003 |
91
|
93
|
94
|
97
|
99
|
88
|
84
|
74
|
71
|
64
|
62
|
53
|
| 2004 |
50
|
52
|
53
|
53
|
55
|
64
|
61
|
60
|
57
|
55
|
51
|
48
|
| 2005 |
47
|
48
|
46
|
48
|
48
|
45
|
43
|
42
|
38
|
38
|
37
|
35
|
| 2006 |
33
|
33
|
29
|
28
|
27
|
32
|
31
|
29
|
28
|
27
|
25
|
25
|
| 2007 |
24
|
24
|
26
|
24
|
23
|
23
|
22
|
22
|
20
|
17
|
17
|
16
|
| 2008 |
16
|
18
|
20
|
19
|
19
|
21
|
22
|
22
|
22
|
25
|
32
|
32
|
| 2009 |
32
|
34
|
32
|
29
|
22
|
21
|
22
|
21
|
20
|
|
|
|
| Total Units |
806
|
807
|
785
|
802
|
798
|
801
|
788
|
791
|
782
|
770
|
767
|
736
|
| Value Today |
395037
|
395547
|
384644
|
393179
|
391107
|
392553
|
385932
|
387727
|
383097
|
377500
|
375749
|
360429
|
| Increase |
275037
|
275547
|
264644
|
273179
|
271107
|
272553
|
265932
|
267727
|
263097
|
257500
|
255749
|
240429
|
| Increase % |
229%
|
230%
|
221%
|
228%
|
226%
|
227%
|
222%
|
223%
|
219%
|
215%
|
213%
|
200%
|
Case 2: Invest on a day when the market was Low for that month
| Year |
Jan |
Feb |
Mar |
Apr |
May |
Jun |
Jul |
Aug |
Sep |
Oct |
Nov |
Dec |
| 1997 |
108
|
105
|
103
|
103
|
97
|
94
|
86
|
90
|
92
|
97
|
102
|
104
|
| 1998 |
106
|
105
|
94
|
87
|
94
|
114
|
111
|
120
|
120
|
124
|
123
|
122
|
| 1999 |
112
|
109
|
98
|
107
|
103
|
89
|
85
|
78
|
74
|
75
|
79
|
72
|
| 2000 |
65
|
65
|
65
|
74
|
82
|
74
|
76
|
76
|
79
|
88
|
83
|
83
|
| 2001 |
80
|
77
|
89
|
98
|
89
|
94
|
95
|
95
|
117
|
111
|
101
|
98
|
| 2002 |
95
|
93
|
89
|
93
|
97
|
96
|
104
|
105
|
104
|
108
|
105
|
96
|
| 2003 |
97
|
97
|
102
|
108
|
107
|
99
|
90
|
85
|
77
|
70
|
66
|
61
|
| 2004 |
56
|
57
|
59
|
56
|
72
|
69
|
66
|
63
|
61
|
57
|
56
|
51
|
| 2005 |
52
|
49
|
50
|
53
|
52
|
48
|
46
|
43
|
42
|
43
|
42
|
38
|
| 2006 |
36
|
34
|
32
|
30
|
33
|
38
|
34
|
32
|
30
|
28
|
27
|
27
|
| 2007 |
26
|
27
|
28
|
28
|
25
|
24
|
23
|
25
|
22
|
20
|
18
|
17
|
| 2008 |
20
|
21
|
22
|
22
|
21
|
25
|
26
|
24
|
26
|
40
|
39
|
38
|
| 2009 |
37
|
37
|
39
|
33
|
28
|
24
|
25
|
23
|
22
|
|
|
|
| Total Units |
890
|
874
|
872
|
890
|
900
|
889
|
867
|
859
|
865
|
862
|
841
|
806
|
| Value Today |
436273
|
428245
|
427391
|
436053
|
440872
|
435399
|
425004
|
421023
|
424054
|
422262
|
411928
|
395127
|
| Increase |
316273
|
308245
|
307391
|
316053
|
320872
|
315399
|
305004
|
301023
|
304054
|
302262
|
291928
|
275127
|
| Increase % |
264%
|
257%
|
256%
|
263%
|
267%
|
263%
|
254%
|
251%
|
253%
|
252%
|
243%
|
229%
|
I collected whatever data was available on NSE-India.com and tried to find if there are any patterns to the movement of index.
While past performance is no indication of what is in store for the future, majority of fund managers and technical analysts follow the same path and base their future decisions on past performances. As long as there are short term traders (and their always will be) you can expect the market to behave the same way as it has done in the past. One term for that is irrational. I don’t know how the rainfall in Cameroon can have an affect on the Indian Equity markets, but it does !! That’s how our markets are. Geopolitical News, rumors, scandals et all keep rocking the markets. I hope the flood in Philippines do not crash our markets tomorrow !!! It is a good ride as long as you are in your senses.
Historically Nifty has seen the market head north from the lows of October to the highs of Jan/Feb before falling again in Mar/Apr. I am not able to come to any conclusion with respect to the reasons, but the fall in Mar/Apr could be attributed to the yearly closure. This is the time everyone files their returns etc and could possibly lead to liquidation. I am not sure, but I am unable to think of anything else. In a nutshell, October lows have been the lowest 33% of the time and March/April lows have also been 33% of the time.
Irrespective of the reasons attributed to the fluctuations, looking at the past investing when the market has a big fall any day during the month of Sep/Oct or March/April could possibly give you more returns than a normal monthly SIP.
For your reference I have here the monthly highs and lows in two separate tables below. Feel free to comment and throw up some more ideas.
Nifty Highs – Monthly (Bold highest for the year)
| Year |
Jan |
Feb |
Mar |
Apr |
May |
Jun |
Jul |
Aug |
Sep |
Oct |
Nov |
Dec |
| 1997 |
1042
|
1020
|
1133
|
1080
|
1069
|
1192
|
1239
|
1293
|
1160
|
1188
|
1090
|
1079
|
| 1998 |
1092
|
1061
|
1147
|
1213
|
1188
|
1054
|
1004
|
907
|
935
|
874
|
875
|
900
|
| 1999 |
990
|
981
|
1079
|
1063
|
1180
|
1214
|
1350
|
1423
|
1415
|
1505
|
1409
|
1488
|
| 2000 |
1639
|
1756
|
1713
|
1625
|
1422
|
1507
|
1533
|
1394
|
1468
|
1298
|
1273
|
1354
|
| 2001 |
1380
|
1417
|
1358
|
1155
|
1198
|
1148
|
1110
|
1079
|
1048
|
993
|
1081
|
1115
|
| 2002 |
1110
|
1189
|
1193
|
1147
|
1128
|
1097
|
1082
|
1011
|
1014
|
974
|
1050
|
1098
|
| 2003 |
1100
|
1070
|
1059
|
1032
|
1007
|
1134
|
1186
|
1357
|
1417
|
1569
|
1619
|
1880
|
| 2004 |
1982
|
1920
|
1885
|
1892
|
1833
|
1551
|
1632
|
1655
|
1754
|
1820
|
1959
|
2081
|
| 2005 |
2115
|
2103
|
2169
|
2069
|
2088
|
2221
|
2319
|
2403
|
2611
|
2663
|
2712
|
2843
|
| 2006 |
3001
|
3075
|
3419
|
3574
|
3754
|
3128
|
3197
|
3430
|
3588
|
3769
|
3969
|
4016
|
| 2007 |
4148
|
4224
|
3876
|
4178
|
4296
|
4318
|
4621
|
4464
|
5021
|
5906
|
5938
|
6159
|
| 2008 |
6288
|
5484
|
4953
|
5196
|
5228
|
4740
|
4477
|
4620
|
4504
|
3951
|
3148
|
3078
|
| 2009 |
3121
|
2948
|
3109
|
3484
|
4449
|
4655
|
4636
|
4732
|
5020
|
|
|
|
Nifty Highs – Monthly (Bold Lowest for the year)
| Year |
Jan |
Feb |
Mar |
Apr |
May |
Jun |
Jul |
Aug |
Sep |
Oct |
Nov |
Dec |
| 1997 |
927
|
948
|
968
|
970
|
1026
|
1065
|
1165
|
1105
|
1085
|
1033
|
981
|
965
|
| 1998 |
941
|
957
|
1064
|
1147
|
1063
|
876
|
899
|
832
|
835
|
809
|
811
|
817
|
| 1999 |
891
|
917
|
1016
|
931
|
971
|
1121
|
1183
|
1285
|
1351
|
1325
|
1270
|
1389
|
| 2000 |
1546
|
1550
|
1528
|
1359
|
1224
|
1349
|
1318
|
1311
|
1266
|
1136
|
1201
|
1212
|
| 2001 |
1254
|
1296
|
1125
|
1025
|
1122
|
1067
|
1052
|
1054
|
854
|
900
|
988
|
1020
|
| 2002 |
1055
|
1074
|
1123
|
1074
|
1027
|
1040
|
959
|
954
|
963
|
923
|
951
|
1036
|
| 2003 |
1035
|
1036
|
978
|
924
|
936
|
1011
|
1109
|
1171
|
1302
|
1421
|
1522
|
1646
|
| 2004 |
1771
|
1766
|
1685
|
1796
|
1389
|
1446
|
1518
|
1578
|
1629
|
1757
|
1798
|
1962
|
| 2005 |
1909
|
2043
|
1984
|
1903
|
1917
|
2065
|
2179
|
2318
|
2406
|
2316
|
2387
|
2661
|
| 2006 |
2809
|
2941
|
3117
|
3346
|
3071
|
2633
|
2933
|
3148
|
3366
|
3515
|
3767
|
3717
|
| 2007 |
3850
|
3745
|
3577
|
3634
|
4067
|
4113
|
4314
|
4075
|
4475
|
5069
|
5519
|
5742
|
| 2008 |
4899
|
4838
|
4503
|
4647
|
4835
|
4041
|
3817
|
4214
|
3850
|
2524
|
2553
|
2656
|
| 2009 |
2679
|
2734
|
2573
|
3060
|
3555
|
4235
|
3974
|
4388
|
4594
|
|
|
|
For those of you who really are scared of the markets this is the best thing to do. Any month of the y ear, as and when you hear in the news that markets have crashed and things are looking gloomy you can invest only 20% of your savings in buying Nifty Index. You don’t need to be an expert to do this .. in fact it doesn’t even matter if you cannot spell makret correctly. It does not matter if you are not able to time the market. As you see the difference over long term when you invest periodically is not much and you wouldnt want to fret over that.
Unlike mutual funds Nifty Index are not controlled by fund managers and their NAVs are not manipulated. Mutual Fund managers are under pressure of performance and are always trying to beat the index or competitors. And that means Mutual Funds are more sensitive to market fluctuations than the Index itself. Why would I take more risk just on the hope that there might be more money in a Mutual fund.. Can anyone Guarantee that ??? !!!!!
I manage mutual funds of company A. Company B approaches me with a better offer and I decide to move to company B. Now I am the fund manager of company B…. Guess where my Focus would be? What happens to your funds if you are invested with A or B… Will the returns be the same, higher or lesser? Too many variables… What if the fund goes bankrupt !!!!
Conclusion: For those ultra safe, phenomenally unlucky investors NIFTY Index funds are the best route. It ensures liquidity, good returns and safety of capital employed.
