Highlights
- West Asia tensions wipe out Rs 36 lakh crore of Indian market wealth, sparking volatility.
- Edelweiss data shows Nifty often bounces back strongly after 18 months of stagnation, delivering up to 248% returns in 3 years.
- Periods of fear and stagnation can create opportunities for long-term investors, says Edelweiss Mutual Fund research.
Rising tensions in West Asia have triggered fresh turmoil in global markets; investors are witnessing significant volatility in stocks, and concerns regarding oil prices and geopolitical risks have intensified.
In India, market wealth amounting to approximately Rs 36 lakh crore has been wiped out in recent sessions, heightening concerns among investors.
However, recent research by Edelweiss, the Nifty 50, suggests that such turbulent periods have often been followed by strong market recoveries over the next few years.
How did the Nifty perform after long periods of stagnation lasting around 18 months?
Data shared by Edelweiss Mutual Fund shows how the Nifty performed after long periods of stagnation lasting around 18 months.
Edelweiss Mutual Fund data looked at multiple periods since 2001 when the market delivered very low or negative returns for roughly a year and a half. The findings show that markets frequently bounced back strongly afterwards.
Between July 2001 and December 2002, Nifty returned only 1.92 per cent over 18 months but delivered a 72 per cent return in the next year and 159 per cent over the next three years.
In another instance between August 2001 and January 2003, the index fell 1.13 per cent but then surged 74 per cent in the next 12 months and 188 per cent over three years.
From October 2001 to March 2003, a modest 0.65 per cent return was followed by an 81 per cent gain in one year and an impressive 248 per cent return in three years.
Not every period delivers big gains
The data shows that, while several periods saw strong recoveries, the data also shows that returns are not guaranteed.
From January 2007 to June 2008, the market fell slightly over 18 months and delivered only 6 per cent return in the following year.
Recent market phase mirrors past stagnation
The latest period from September 2024 to February 2026 shows that the Nifty has delivered just about a 2.31 per cent return over the past 18 months, indicating another phase of limited market movement, as per
Edelweiss Mutual Fund data.
In another phase from March 2008 to August 2009, the next one-year return was 16 per cent, while the three-year return was just 13 per cent.
This period also coincides with an increase in global uncertainties, including geopolitical tensions and fluctuations in commodity prices.
What investors should learn from the data?
Edelweiss Mutual Fund data suggests that periods of fear and stagnation in the markets can sometimes create opportunities for long-term investors.
When the market remains stable for an extended period and the market sentiment turns negative, pricing becomes more rational. Investors who remain invested during such times often reap rewards when the market cycle turns positive again.
This data shows that markets move in cycles. Periods of uncertainty and low returns are often followed by phases of rapid growth.
(Disclaimer: The above article is meant for informational purposes only, and should not be considered as any investment advice. ET NOW DIGITAL suggests its readers/audience to consult their financial advisors before making any money-related decisions.)
