Nifty surges 14 times since inception; RIL, SBI, HDFC Bank among 13 stocks in Nifty 50 since 1996

By: |
February 9, 2021 3:51 PM

BSE Sensex and Nifty 50 have surged over 10 per cent so far in February in a broad-based Union Budget 2021-driven rally.

Sensex, Nifty, RIL, HDFC Bank, SBI, HDFCMotilal Oswal analysts say that Nifty’s journey from 1,107 to 2,000 was the most excruciating, as it took a total of 8.7 years. Image: Reuters

BSE Sensex and Nifty 50 have surged over 10 per cent so far in February in a broad-based Union Budget 2021-driven rally. The 30-share Sensex has claimed the crucial 51,000 level, while the broader 50-stock NSE Nifty climbed to above 15,000 level. Nifty took nearly 18 years since inception to reach 7,000-mark, while the next 8,000 points accrued in less than seven years. On the back of the fast-spreading coronavirus pandemic, the benchmark index tumbled to a low of 7,600 in March 2020. However, staging a smart recovery, it nearly doubled and zoomed to 15,000 levels in 220 days. This sharp recovery was aided by benign global liquidity backdrop, better containment of COVID-19 cases, a sharp recovery in corporate earnings, and a market-friendly budget, say analysts at Motilal Oswal Financial Services.

In the last 25 years since Nifty 50’s inception, the index has delivered calendar annual returns of more than 20 per cent in 10 years; while it declined in 7 years. While traversing its journey from 1,107 to 15,000, the Nifty (up 14x) has delivered 11.1 per cent CAGR in the last 25 years.

Motilal Oswal analysts say that Nifty’s journey from 1,107 to 2,000 was the most excruciating, as it took a total of 2,167 trading days (8.7 years). The move from 6,000 to 7,000 levels 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 in just 25 days. Of course, as the levels move higher, every 1k point journey implies lower percentage returns,” they added.

13 stocks traversed the entire Nifty 50’s journey

Out of the 50 stocks in the Nifty, 13 companies — HDFC Bank, Reliance Industries Ltd (RIL), Housing Development Finance Corporation, ITC, Hindustan Unilever Ltd, L&T, State Bank of India (SBI), Tata Motors, Dr Reddy’s Laboratories, Tata Steel, Grasim Industries, Hero MotoCorp, and Hindalco Industries Ltd — have been a part of the index’s journey since inception. The report highlighted that the combined market-cap of these 13 companies has grown at a CAGR of 18 per cent between April 1996 and February 2021. Besides, in line with the change in the underlying composition of the Nifty, the valuation multiples of the Nifty have also moved up. “The average P/E multiple of the Nifty between Apr’1996 and Feb’2021 stands at 15.7x; however, the average for the last 10 years is 18.8x,” it added.

The brokerage firm also stated that the Nifty in April 1996 had zero representation from Technology, and was dominated by Consumer, PSU Banks and other sectors such as Oil & Gas, NBFC, Autos, Metals, and Textiles. Back then, private banks had only one representative in the form of HDFC Bank.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, Check out latest IPO News, Best Performing IPOs, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1US stocks jump, bond markets calm down; Dow Jones, S&P 500 soar 1.5% on vaccine, stimulus optimism
2PGCIL shareholder? Power Grid Corporation board okays Rs 4/share interim dividend
3Sensex, Nifty regain nearly half of Friday’s losses, end near day’s high; check key support, resistance levels