In Sept. 2024, Indian markets were making new highs. The trailing returns for Nifty50 looked fantastic back then at 33.3% over 1 year, 24.1% over 2 years and 17.8% over 5 years. Many investors, especially those who had started recently, took these numbers as the new normal! They began expecting 18-25% every year from equity as their birthright, and some even planned their goals around it.
But that was never normal. It was just what the calculation showed at the peak.
Now fast forward to today and look at the same returns data (as of 30-Oct-2026). After more than two years of a sideways-to-down market, the 1-year CAGR is -10.4% and the 2-year is -2.4%. Even the 3, 4 and 5-year numbers have come down to 5.5-6.5%, which is at times lower than what a plain bank FD would have paid (a comparison being made a lot these days).
But the markets did not change their nature. Only the starting point of the calculation has changed.
Trailing returns measured at a high will always look great, and the same measure taken after a long flat patch will look poor. Impatient investors are troubled right now because they anchored on the first set of numbers. Their expectation was wrong to begin with, and the market is only correcting it.
Equity returns come in uneven lumps. Long, dull stretches are the price you pay for the strong years, and no one gets one without the other.