Where is the market headed?
Markets rebounded after a weak start, with buying picking up strongly post-noon. Broader indices, including mid and small caps, participated in the recovery, signalling a broad-based bounce. Real estate and pharma led sectoral gains, while IT remained under pressure. The advance-decline ratio improved sharply by the close, reflecting renewed optimism. Overall, a strong session after several days of weakness.
Market Overview
Nifty posted a solid gain of 0.57% today, marking a positive shift after recent declines.
Nifty Next 50
Nifty Junior also staged a strong comeback, rising 0.91% in today’s session.
Nifty Mid and Small Cap
Mid-caps were up 0.8% and Small-caps gained 0.9%, reflecting a fairly balanced and broad-based recovery across the market.
Bank Nifty
Nifty Bank was the slowest mover among the indices, managing a modest gain of just 0.24%.
GOLD
Gold moved up slightly by 0.5%, now trading at ₹9,835 per gram. It continues to consolidate in this range, holding steady as it awaits a clear directional move.
Advance Decline Ratio
The first half of the session was weak, with advances slipping sharply. However, post-noon, the trend reversed as buying picked up. By the end of the day, the advance-decline ratio had turned positive at 361 advances to 139 declines, showing a clear shift in sentiment.
Heat Maps
Reliance led the rally with a 2% gain, joined by L&T up 2% as well. Other strong performers included Eicher Motors, Wipro, Maruti, Bharti Airtel, Jio Financial, HDFC Bank, and Bajaj Finance—all showing solid upward momentum.
On the flip side, TCS continued to struggle under the weight of recent layoff news. It became the first Nifty stock to hit a 52-week low, now down around 31% from its recent highs—a significant correction. Asian Paints also saw a strong move, rising 1.78%.
The Nifty Next 50 looked even stronger, with green across names like Bosch, Adani Power, Varun Beverages, and Torrent Pharma, some boosted by strong earnings. Lodha, DLF, Bajaj Holdings, REC and PNB also bounced back. Even Hyundai and Swiggy staged a recovery.
Sectoral Overview
Sectoral trends showed a broad-based recovery. Defence closed with a marginal loss of 0.36% after being down nearly 2% intraday, staging a late comeback. Real Estate rebounded 1.6% after taking a beating in recent sessions.
Pharma led the rally from the start, gaining 1.37%, followed by Infra up 1.2%, Energy and Oil & Gas each up 1%, and Capital Markets also rising 1%.
Overall, it was a strong day across sectors. The key question now is whether this momentum can sustain in the coming days.
Sector of the Day
Nifty Realty Index
The Real Estate sector saw a small bump up, with most stocks in the space performing reasonably well and contributing to the broader market recovery.
Story of the Day: How to (NOT) choose a strategy for your investment
One of the most commonly used metrics in evaluating investment strategies is the Compound Annual Growth Rate (CAGR). While it offers a convenient way to summarize returns over a period, it can also be highly misleading if taken at face value. Many investors fall into the trap of selecting investments based purely on historical CAGR—20%, 30%, even 40%—without digging deeper. This approach overlooks key variables like consistency of performance, market cycles, and the influence of starting points on outcomes.
CAGR is a cumulative growth rate that smooths out performance over a given period, but it says little about the journey itself. Was the growth linear? Were there long stretches of underperformance? Did the bulk of returns come from a single market event like a rally or recovery? The starting point of the investment period has a massive impact. For instance, a five-year CAGR from January 2020 to January 2025 might be 14%, while a similar period starting just three months later in May 2020 could reflect a 20% CAGR (see the image below).
That small timing difference—coinciding with the COVID market bottom—can significantly skew perceptions of the strategy’s effectiveness.
CAGR also tends to create a false mental expectation that returns will be linear—an investor might assume that a 20% CAGR translates to 20% returns every year. When real-world returns deviate from that mental model, especially during years of zero or negative returns, disappointment sets in. Many investors abandon potentially solid strategies simply because they aren’t delivering steady annual results, despite those strategies performing well over longer horizons.
The tendency to chase last year’s best-performing fund or strategy is another common mistake. Every year, only a handful of strategies outperform, and they don’t remain at the top consistently. Jumping from one top performer to another often results in average or even subpar outcomes. This behavior is fueled by short-term metrics and the absence of a deeper understanding of what drives performance over time.
To get a more accurate picture, investors should examine rolling returns—returns calculated over consistent timeframes (such as one, three, or five years) across multiple overlapping periods. This approach provides insights into the consistency of performance and helps identify periods of volatility or stagnation that CAGR alone can mask. For example, evaluating a strategy’s one-year rolling returns between May 2020 and May 2025 might show only a few months where returns exceeded the long-term CAGR. The majority of the time, returns fell below expectations, despite a strong overall CAGR at the end of the period.
Visualizing the difference between rolling returns and CAGR can be revealing. One-year rolling returns may vary dramatically—from highs of over 60% to lows of negative 30%—even while the overall CAGR stays relatively stable. This disconnect can create significant cognitive dissonance for investors expecting smooth, predictable growth.
Looking at long-term market data, such as the Nifty 50 over the past 25 years, reinforces this lesson.
The index has delivered around 12.4% CAGR—a respectable return compared to traditional savings instruments. But this journey includes extended sideways markets, global financial crises, and sharp corrections. During certain periods, even three-year returns dropped to zero or negative, despite long-term gains. The more one extends the rolling return horizon—from three to five to seven years—the more the volatility reduces and the closer it aligns with the long-term CAGR. Still, even five- and seven-year returns can vary significantly depending on the entry point.
Data shows that three-year rolling returns outperformed the long-term CAGR only about 52% of the time—and just 39% if the extreme effects of the global financial crisis are excluded.
Five-year returns performed better than CAGR only 47% of the time overall, and 38% if the GFC period is removed. For seven-year rolling returns, only 37% of the time did they exceed the long-term CAGR. These figures illustrate that investors are more likely to experience returns below the advertised CAGR during their holding period.
Given this, it’s clear that making investment decisions solely based on historical CAGR is insufficient. A comprehensive evaluation should also include an understanding of the strategy’s philosophy, its underlying style, historical volatility, drawdowns, and risk-adjusted metrics like Return Over Maximum Drawdown (ROMAD). One should consider whether past returns were boosted by unusually favorable starting points and whether the strategy outperformed its benchmark consistently.
Furthermore, comparing the average rolling return over relevant periods to the long-term CAGR can give a better sense of what to expect. Understanding the likely return experience across different timeframes allows investors to set realistic expectations and stay committed during periods of underperformance.
Ultimately, the goal is to build conviction in a strategy based on deeper analysis rather than headline numbers. By doing so, investors can avoid the costly mistake of hopping between strategies based on short-term results and instead position themselves for long-term success.
