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

TL;DR

This study compares the performance of SIP timing strategies in India's Nifty 50 over 22 years, revealing that aligning SIPs with F&O expiry days offers short-term advantages, but these diminish over longer horizons, challenging common return narratives.

Contribution

It provides the first comprehensive 22-year analysis comparing F&O expiry-aligned SIPs with traditional first-trading-day SIPs, highlighting timing advantages and their decay over time.

Findings

EXP-SIPs outperform FTD-SIPs by 0.5-2.5% annually in 1-5 year horizons

The timing advantage diminishes and becomes negligible over 10-20 years

The 20-year pre-tax CAGR for Nifty 50 SIPs is approximately 6.7%

Abstract

Systematic Investment Plans (SIPs) are a primary vehicle for retail equity participation in India, yet the impact of their intra-month timing remains underexplored. This study offers a 22-year (2003--2024) comparative analysis of SIP performance in the Nifty 50 index, contrasting the conventional first-trading-day (FTD-SIP) strategy with an alternative aligned to monthly Futures and Options expiry days (EXP-SIP). Using a multi-layered statistical framework -- including non-parametric tests, effect size metrics, and stochastic dominance -- we uncover two key findings. First, EXP-SIPs outperform FTD-SIPs by 0.5--2.5\% annually over short-to-medium-term horizons (1--5 years), with Second-Order Stochastic Dominance (SSD) confirming the EXP-SIP as the preferred choice for all risk-averse investors. Second, we establish boundary conditions for this advantage, showing it decays and becomes economically negligible over longer horizons (10--20 years), where compounding and participation dominate. Additionally, the study challenges the prevalent ``12\% return'' narrative in Indian equity markets, finding that the 20-year pre-tax CAGR for Nifty 50 SIPs is closer to 6.7\%. These findings carry significant implications for investor welfare, financial product design, and transparency in return reporting.