According to a FundsIndia analysis of Sensex data from 1980 to 2025, the benchmark index witnessed an average intra-year drawdown of around 20%. As reported by Mint, this statistic is significant because a 20% decline is often viewed as a major market event, yet the data suggests such corrections were not confined to extraordinary periods such as the global financial crisis, the dotcom crash or the pandemic selloff. The findings indicate that double-digit market corrections have historically been a recurring feature of equity markets rather than a rare occurrence.
Despite the average intra-year decline of around 20%, nearly four out of every five years ended with gains. According to FundsIndia's analysis, the reason lies in how the two measures are calculated - drawdown captures the distance between the highest and lowest point reached during a year, while annual return measures only the difference between where the market started and finished. The data shows that sizeable corrections frequently occurred during years that ultimately ended in positive territory, challenging the common perception that double-digit market declines are necessarily associated with poor annual outcomes.
The analysis reveals that investment horizon matters significantly in equities. According to FundsIndia's rolling return analysis of the Nifty 50 TRI since 1999, there was no instance of negative returns over any seven-year holding period. The lowest annualised return generated over seven years was 5%, while the average annualised return stood at 15%. The probability of earning meaningful returns improved with time - investors earned more than 10% annualised returns in 85% of all seven-year periods, while nearly all seven-year periods, about 98%, delivered returns above 7%.
The contrast with shorter holding periods was far sharper - one-year returns ranged from a gain of 108% to a decline of 55%, and 23% of one-year periods generated negative returns. While 10-20% declines occurred regularly, their impact on outcomes became less significant as the holding period increased. The data suggests that while short-term market movements were often unpredictable, investing for the long term helped smooth out the impact of market volatility. For investors, the historical data offers context that a 10-20% correction may appear significant in the moment, but such declines have occurred regularly even during periods that ended with positive returns.
