F&O Expiry vs. First-Day SIPs: A 22-Year Analysis of Timing Advantages in India's Nifty 50

Siddharth Gavhale

Papers from arXiv.org

Abstract: This study presents a comparative analysis of Systematic Investment Plan (SIP) performance in India's Nifty 50 index over a 22-year period (2003--2024), focusing on the timing of investments -- specifically, the first trading day (FTD) of each month versus the monthly expiry day of Futures and Options (EXP). The research establishes, through mathematical validation, that SIP returns are independent of the invested amount. Leveraging historical index data, the study finds that SIPs timed on F\&O expiry days consistently outperform FTD-SIPs by 0.5--2.5\% annually over short- to medium-term horizons (1--3 years), highlighting a tactical advantage due to expiry-related market volatility. However, this advantage diminishes over longer durations (10--20 years), reaffirming that sustained, long-term investing is the key driver of wealth accumulation. Additionally, the analysis challenges prevailing industry narratives by revealing that the 20-year compounded annual growth rate (CAGR) of Nifty 50 SIPs stands at approximately 6.7\% (pre-tax), significantly lower than the widely advertised 12--15\% returns. This research offers novel insights for retail investors and financial planners on the role of investment timing in SIP strategies within the Indian Indian equity market.

Date: 2025-07
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