NEW DELHI, India — Indian equities have continued to deliver strong long-term returns, reinforcing their role as a key driver of wealth creation, according to a report released Tuesday.
The FundsIndia “Wealth Conversations Report” found that equities have generated annual returns of 11 to 12 percent over the past 20 years, with the benchmark Nifty 50 index increasing investor wealth more than eightfold during that period.
Over a longer time frame, equities have expanded nearly 80 times since 1990, translating to annualized returns of about 13 percent.
“Overall, time in the market is more important than timing the market, as every major market correction in history has eventually been followed by recovery and long-term wealth creation,” the report said.
The findings highlight that volatility remains a consistent feature of equity markets. Historically, declines of 10 to 20 percent within a year occur almost annually, yet nearly 80 percent of years still end with positive returns, suggesting that downturns are often temporary.
“Large market corrections of 30–60 per cent have occurred once every 7–10 years, with recovery periods typically ranging between 1–3 years, often followed by strong upside, reinforcing the importance of staying invested,” the report noted.
Mid- and small-cap stocks have outperformed large-cap equities over the long term, with midcaps delivering compound annual growth of around 14 percent over 20 years. However, these segments also experience sharper and more frequent declines, underscoring the need for a balanced investment approach.
The report also found that extending the investment horizon significantly improves outcomes. Holding equities for more than seven years has consistently increased the likelihood of achieving double-digit returns, with many such periods showing no negative returns.
Disciplined investment strategies, including systematic investment plans (SIPs) and systematic transfer plans (STPs), were highlighted as effective tools for managing volatility and reducing market timing risks while steadily building wealth.
“Over long periods, equities have consistently outperformed inflation, debt, gold, and real estate, underlining their importance as a core component of long-term portfolios,” the report said.
While real estate remains relatively stable, it has delivered more moderate long-term returns of around 7 to 8 percent, reinforcing the importance of diversification rather than concentrating investments in a single asset class. (Source: IANS)
