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Charts & Analysis

Sensex Rolling 5Y Returns at 2.21%

The rolling returns for the Sensex (suitably annualized) are in the graph below:

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Read this as: At "May 12" the 10 year return indicates the return I would have got had I invested 10 years ago in the Sensex, i.e. in May 2002, annualized.

Note carefully that none of the lines are close to their lows – that means returns are likely to go lower. But that needn’t mean the index itself goes down from today’s value; in 2013 Jan, the five-year-ago value will be over 20,000 for the Sensex, so even if we stay where we are, rolling returns will look negative.

Sure, you could say why not do a 5 year investment plan (SIP) instead, investing every month. What about those returns then?

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Sadly, our returns have been lower than a fixed deposit, other than the 10 year SIP return. But that, I think, is because the Great Indian Stock Market Story Was Only For Five Years.

  • Inder says:

    Well, then where should the retail investor go ? FD doesn’t give a Tax free return of more than 7% and Inflation outnumbers that returns. Is that the reason why Indians spend so much on Gold and real Estate ? At least, both of them have beaten inflation over 5 year, 10 year.

  • Inquisitive says:

    Hi- good charts… This proves 3 points… If you don’t have lumpsum money SIP will give close to that over various periods of return…
    The 3 year return would have been good till mar but we have 2 circuit breakers in may after UPA1 which made the base high…. Interesting…
    Now MF can’t use 3 or 5 years.. They have to show 4 years to attract investors…
    As a contrarian view is it good time to enter as this is similar to 2001-2003

  • subra says:

    i guess it is difficult, but if you had used reinvestment of dividends, the returns should be at least double. Not to say it is too much, but in a sideways market like this, even that 2-3% dividend yield compounded over 5 years would have made a decent difference, what say?