Nifty up 14 times in 25 years

NSE Nifty is up 14 times in 25 years, traversing its journey from 1,107 to 15,000 points mark in the last 25 years.

For the first time in history, the Nifty has closed above the psychological mark of 15,000 on February 8, 2021.

According to a report by Motilal Oswal Financial Services, the Nifty has delivered 11.1 per cent CAGR returns in the last 25 years. While some sectors gained prominence, others have faded. Over the years, the sectoral representation of the Nifty has undergone a world of change. In fact, the representation of sectors remains in consonance with the changes in the underlying economy.

Only 13 companies have traversed the entire journey. Of the 50 stocks in the 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.

As per the report, calendar year 2009, the post-GFC year — in which the markets rebounded from the lows of the GFC and the UPA formed a stable government at the Centre — was the best year of annual returns, with the Nifty delivering 76 per cent gains.

On the other hand, CY2008, the year of the Global Financial Crisis (GFC), was the worst — the Nifty ended this year with a 52 per cent decline.

In the last 25 years, the Nifty has given calendar annual returns of more than 20 per cent in 10 years and has declined in 7 years.

The Nifty’s journey from 1,107 to 2,000 was the most excruciating — as it took a total of 2,167 trading days (almost 8.7 years). The move from 6,000 to 7,000 was also prolonged (1,589 trading days or 6.5 years) as the markets took time to recover from the long phase of correction in the aftermath of the GFC in 2008. On the other hand, the move from 14,000 to 15,000 has been the quickest — covered over just 25 days. Of course, as the levels move higher, every 1,000 point journey implies lower percentage returns.

Nifty has come a long way after it was launched in April 1996, when it traded at 1,107, with the base year of November 1995 set as 1,000. Like the Sensex, which recently crossed the 50,000 market, Nifty took nearly 18 years to reach 7,000 while the next 8K has come in the last 6.8 years, the report said.

Nifty 50 Index constituents make up roughly 58 per cent of the total India market cap. On this spectacular journey, the Nifty has mirrored the country’s economic growth from the time that it was launched. It saw the initial phase of political instability over 1996-98; since then, it has seen and overcome various challenges – such as the Asian Financial Crisis, the dot com bubble, the Global Financial Crisis, the Taper Tantrum, and the COVID pandemic – all of which have shaped it into the economic powerhouse it is today.

The recent sprint to 15,000 in February 2021, from pandemic lows of 7,600 in March 2020 — has seen the index has double in just 220 days. 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, the report said.