Domestic headline equity index Nifty50, that closed above the historic mark of 15,000 for the first time this week, took just 220 days to double from its 52-week low of 7,511 on March 24. The sharp recovery in the index has been driven by a benign global liquidity backdrop, better containment of COVID-19 cases, sharp recovery in corporate earnings, and a market-friendly Budget.
Let us take a look at Nifty's spectacular journey from 1,107 points in 1996 to 15K in 2021, as explained in 7 charts by Motilal Oswal.
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The 25 years of Nifty50
When Nifty was launched in April 1996 at 1,107 points, November 1995 (1,000 points) was treated as the base year. Nifty took nearly 18 years to reach the 7,000 milestone while the next 8,000 points took just 6.8 years. Nifty's journey from 1,107 to 2K was the most excruciating one as it took a total of 2,167 trading days (almost 8.7 years). Nifty is up 14 times in 25 years.
While traversing its journey from 1,107 points to 15K, Nifty delivered 11.1 per cent CAGR returns in the last 25 years. While the returns have been impressive, this has been a non-linear journey.
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Investor wealth
Nifty50 constituents make up roughly 58 per cent of the total market cap of listed companies in India, according to a Motilal Oswal report. By growing at the rate of 19% CAGR, Nifty's market cap shot up by 69 times to $117 trillion this week.
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The roller coaster ride
In the last 25 years, Nifty has went through the political instability of 1996–98, Asian financial crisis, the dot com bubble, the global financial crisis, Taper Tantrum, and the latest COVID pandemic. Calendar year 2008, the year of the Global Financial Crisis (GFC), was the worst for Nifty as it declined 52 per cent. The best year was 2009 (76 per cent returns), when the stock market rebounded from the lows of the GFC and the UPA formed a stable government at the Centre.
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The ups and downs
On a calendar year basis, Nifty has delivered annual returns of over 20 per cent in 10 years and gave negative returns for 7 years.
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From zero to hero
Mirroring the changes in the economy, sectoral representation has also changed over the years. When Nifty began its journey in 1996, it had no representation from technology and was dominated by consumer, PSU banks, and other sectors such as oil & gas, NBFCs, autos, metals, and textiles. Private banks had only one representative in the form of HDFC Bank with 0.4% weight. The top 2 sectors in 2021 are private banks (25.5%) and Technology (16.1%).
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The Survivors
Out of the 50 stocks in Nifty, thirteen companies – HDFC Bank, RIL, HDFC, ITC, HUL, L&T, SBI, Tata Motors, Dr Reddy’s Labs, Tata Steel, Grasim, Hero and Hindalco – have been a part of the index’s journey since inception.
Since June 30, 1999, the Nifty 50 Total Return (TR) index has given annualized returns of 14.2% CAGR with annu- alized volatility of 22.9%. TR index assumes dividends are reinvested in the index and hence represent both Price Return (PR) and Dividend return.
In the last 15 years, the NIFTY 50 index delivered a nearly 12% average annual return. As the table shows, if you would have invested Rs. 10,000 every month in the NIFTY 50 index since January 2006, then your total investment value would have stood at Rs. 55.05 lakh at the end of August 2021.
The NSE Nifty went up by 92.30 points or 0.39% to hit a record closing high of 23,557.90 for the fourth straight session. It rallied 113.45 points or 0.48% to hit the new all-time high of 23,579.05 during the day trade.
The largest gap up historically is 10.7% happened during 2009 May, largest percentage gain made in intraday by going long at open is 9.18% which happened in 2008 global financial crisis time.
The Nifty is calculated using the base value of 1,000. The market value is divided by the base market capital multiplied by the base value of 1,000 to determine the index value of Nifty daily. Index Value = Current Market Value / (1000 * Base Market Capital).
BSE Sensex climbed 334.03 points to hit its fresh lifetime peak of 77,326.80, Nifty went up by 108.25 points to hit its new all-time high of 23,573.85.
in last 20 yrs nifty is up 7 TIMES. so if that can be repeated then in next 20 yrs we can see nifty at 9600 *7 = 67200 levels. if gdp grows for 6 % in next 10 yrs + 4 % inflation and then in next 10 yrs gdp growth of around 5 % + 3% inflation then nifty in 2040 can see levels around 60 thousand to 70 thousand .
NIFTY is one of the two national indices, the other being SENSEX, a product of the Bombay Stock Exchange. It is owned by the India Index Services and Products (IISL), which is a fully-owned subsidiary of the National Stock Exchange Strategic Investment Corporation Limited.
NIFTY is the largest stock market index of the NSE. It includes the 50 leading companies traded on the NSE, chosen based on their free-float market capitalization. Among all the indices, NIFTY50 is the most widely utilized and traded by investors. It showcases the top 50 stocks traded on the NSE out of 1600.
Readings above 200 imply an overbought condition, while readings below −200 imply an oversold condition. CCI between -200 & -50 implies a bearish condition. CCI between -50 & 50 implies neutral condition. CCI between 50 & 200 implies bullish condition.
Market Trends: The stock market is influenced by various macroeconomic factors, such as interest rates, inflation, geopolitical events, etc. These factors can impact the performance of NIFTY 50 stocks.
According to experts, our one-year forward objective for the Nifty 50, which is set for March 2025, is 24,800. This represents a 10% upside against the long-term predicted returns of around 14%.
In 2023, the returns on Nifty 50 reported a rise of 19.42 percent compared to the year before. Furthermore, since 2016, Nifty 50 has consistently demonstrated a positive trend in annual returns.
Stock Market Average Yearly Return for the Last 20 Years
The historical average yearly return of the S&P 500 is 9.88% over the last 20 years, as of the end of April 2024. This assumes dividends are reinvested. Adjusted for inflation, the 20-year average stock market return (including dividends) is 7.13%.
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