Around 25 years ago, the National Stock Exchange’s (NSE) equity index Nifty50 was launched on 22 April, 1996. Then the index traded at 1,107, with the base year of November 1995 set as 1,000. For the first time in history, Nifty closed above the psychological mark of 15,000 on February 8, 2021. It had risen to a record 15,289 on February 15, 2021.
The Nifty 50 is a benchmark Indian stock market index that represents the weighted average of 50 of the largest Indian companies listed on the National Stock Exchange. It is one of the two main stock indices used in India, the other being the BSE Sensex. The Nifty 50 index is one of the many stock indices of Nifty.
According to a report by Moneycontrol, of the 50 stocks in the Nifty, 13 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.
According to a report by brokerages firm Motilal Oswal Financial Services, the combined market cap of these 13 companies has grown at a CAGR of 18 percent between April 1996 and February 2021.The average P/E multiple of the Nifty between April 1996 and February 2021 stands at 15.7 times; however, the average for the last 10 years is 18.8 times, the brokerage firm said.
In 1996, public lender State Bank of India (SBI) had the highest weightage at nearly 8.6 percent, followed by Tata Motors at 6.9 percent. Even though they continue to be a part of the index, they have been overtaken by other stocks. Reliance Industries is currently is currently the highest weighted stock, followed by HDFC Bank.
The Nifty (up about 14 times) has delivered 11.1 percent CAGR returns in the last 25 years. The double-digit compounding returns of Nifty50 over the last 25 years reflect the underlying growth potential of India across various sectors.
The Nifty 50 index is the most-traded derivatives index, today. It is also the most-tracked index by domestic exchange-traded funds (ETFs) with assets under management of $18 billion (Rs 1.35 trillion), according to a report in Business Standard.
On April 22, 2021, the index closed 110 points, or 0.77 percent, higher at 14,406.15.