Nifty Index is a terrible investment during most market cycles

Aug 12, 2023

I explored a few stats that made me re think whether it made any sense to buy nifty futures, options. Here were a few (well shocking for me) statistics

1. CNX 500 has outperformed Nifty on an absolute basis for long periods of time
   
2. Bank Nifty has performed even worse than the Nifty - buying that is a losing game
   
3. Why? I dont know - maybe diversification , low representation of new age stocks, too much commodity / cyclical exposure
   
4. Nifty does great during bear cycles - fairly evident why - mutual fund managers like to smash it, buying puts, shorting futures to hedge their exposure
   

Bottom Line - Am only going to be looking at Nifty and bank nifty as hedging instruments unless proven otherwise. I do hope we have a CNX 500 Index coming soon.

Till then - buy strong stocks, growth names - and use the indices to hedge like the fund managers

Sep 5, 2023

Note

Continues to perform poorly Vs CNX 500 - look at the charts and u will see what i mean. If u were to stop looking at nifty for 1 year - u wud do far better