Myth-busting

NIFTY's entire two-year rally happened overnight

NIFTY · Apr 2023 – Mar 2025 · 488 sessions · spot

Disclaimer: For educational purposes only. These are backtested past results, not investment advice. Trading involves risk, and past performance does not guarantee future returns.

query › "Compare buying NIFTY at close and selling at the next open (overnight) vs buying at open and selling at close (intraday)."

+11,248

Overnight · net pts

−5,126

Intraday · net pts

3.98

Overnight Sharpe

−1.14

Intraday Sharpe

65.8%

Overnight win rate

Growth of a NIFTY position — where the return accrued (points)

Every point NIFTY moves happens in one of two windows: overnight — from one day's close to the next day's open, while the market is shut — or intraday, from the open to the close while everyone is trading. We split two years of NIFTY returns into those two buckets. The result is one of the most lopsided things in this whole blog.

The market made its money asleep

Holding NIFTY only overnight — buy the close, sell the next open — returned +11,248 points with a remarkable Sharpe of 3.98 and a tiny drawdown. Holding it only intraday — buy the open, sell the close — lost 5,126 points, with a negative Sharpe and a −6,600-point drawdown. The index rose over the period; essentially all of that gain, and then some, arrived in the gaps between sessions.

Why this happens

Global cues, overnight US moves and pre-open order flow get priced into the opening print. The intraday session, by contrast, is where the two-way fight, the intraday reversals and the mean-reversion live. This pattern shows up in many equity indices worldwide — but it's rarely this stark. Note it is a spot decomposition and ignores overnight gap risk on any single night.

Takeaway

If you're an intraday trader, you are fishing in the pond where the index itself made negative money — your edge has to come entirely from timing, not from drift. And the popular fear of "overnight risk" is, over this window, exactly backwards: the overnight held all the reward. Know which game you're actually playing.

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