Invest in Credit Risk Mutual Fund or not?

The National Stock Exchange’s (NSE) flagship index Nifty, which was launched on April 22, 1996, celebrates its silver jubilee anniversary on Thursday. 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. Here’s a look back at the key milestones over the last 25 years.

For investors of Nifty and its listed stocks, it has been a rewarding journey as the Nifty is up 14 times in 25 years, traversing its journey from 1,107 to 15,000 points mark in the last 25 years. According to experts, Nifty has delivered 11% CAGR returns in the last 25 years.

Over the years, the sectoral representation of the Nifty has undergone many changes. While some sectors gained prominence, others have faded 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.

There were also hard times for the Nifty to face this long journey. 2008, the year of the Global Financial Crisis (GFC), was the worst for the Nifty as it ended this year with a 52% decline.

However soon after, CY09, the markets rebounded from the lows, led by the UPA forming a stable government at the Centre. This was by far, the best year of annual returns, with the Nifty delivering 76% gains.

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

‘Nifty has come a long way’

According to a Motilal Oswal Financial Services report,  the Nifty’s journey from 1,107 to 2,000 was the most painful as it took a total of almost 8.7 years to achieve the level. The move from 6,000 to 7,000 was also prolonged and took almost 6.5 years as the markets took time to recover from the long phase of correction in the aftermath of the Global Financial Crisis in 2008. It was the first time in 10 years that the Nifty has hit two successive 1000-point marks in the same year, ie, Nifty hit both 9,000 and 10,000 for the first time in 2017 only. The Nifty-50 took 21 years to rise from 1,000 to 10,000, returning 11.6% per year (CAGR). On the other hand, the move from 14,000 to 15,000 has been the quickest — covered over just 25 days.

For the first time in history, the Nifty closed above the psychological mark of 15,000 on February 8, 2021. It had surged to a record 15,289 on February 15, 2021.

The recent sprint to over 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 ‘one-in-a-hundred-years’ budget.

On this spectacular journey, the Nifty has mirrored the country’s economic growth. 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 an economic powerhouse it is today.

Nifty’s 9 Key Milestones