Further, data from January 1 to January 19 this year reveals that the S&P CNX Nifty (Nifty) and BSE Sensitive Index (Sensex) were down by 3-4 per cent due to concerns arising from the Satyam [Get Quote] episode in India and negative global cues.

Crisil Research expects the market to continue to be range-bound during the rest of 2009. An analysis by Crisil Research reiterates the importance of appropriate timing while investing in equities as an asset class vis-�-vis other financial asset classes.

Also, despite the recent declines, both lead indices - the Nifty and the Sensex - have had a reasonable returns record since 1996 and 1979, respectively.  Returns on the Nifty exceeded 30 per cent in five of the eight years that it delivered positive returns since 1996. Of the 21 years since 1979 that the Sensex delivered positive returns, returns exceeded 30 per cent per annum in 11 years.

The decline in the lead indices over the last one year was about 50-52 per cent.

S Venkataraman, senior director, Crisil Research, says, "To examine the effect of the global market meltdown on a broader base of stocks, we analysed the returns of S&P CNX 500 stocks and observed that merely 1 in 125 stocks delivered positive returns in 2008. The extent of erosion of shareholders' wealth was indicated by two out of every three stocks declining by over 75 per cent."

While the equity market meltdown has had an obvious impact on investor returns, the latest market decline underscores the importance of timing for equity investors.

Crisil Research analysed the relative pay-off between equities and debt as represented by an investment in the Nifty and 10-year government bonds respectively.

For investments made in January 1998 and held until December 2007, returns from equity were 3.6 times that from the bonds. However, if held on until December 2008, returns from equity were a paltry 19 per cent higher than returns from the bonds.

Chetan Majithia, head-equities, Crisil Research, says, "Early 2008 saw a strong bull run with the Sensex at exceedingly high valuation levels trading at 22 times its forward earnings. Currently, however, the market P/E has moderated. Considering the expected decline in corporate earnings and slower economic growth of 6-7 per cent in 2009, we expect the Sensex to remain in the 8,500 -10,700 range."