Nifty Index Returns - High Level Quantitative Outlook on last 26 years

Positive Years:

1999:Recovering from economic sanctions post India's nuclear test, Asian financial and Russian debt crisis ; India's economic reforms eased inflation and increased GDP and Foreign Investment ; significant increase in technology and telecom sectors stock price ;Y2k bug acted as a catalyst for IT service demand

2003: Swift recovery from the dot-com bubble burst; global economy grew by 3.6% (IMF) with India's GDP growth rate at 7.9% (World Bank); reduction in interest rates, with the US Federal Reserve cutting rates to 1.0% and the Reserve Bank of India (RBI) reducing the repo rate to 5.0% from a high of 6.5% earlier in the year; acceleration of technology and services industries in India, with IT sector revenues increasing by 26% (NASSCOM); FDI inflows to India reached $4.3 billion, a 17% increase from the previous year (UNCTAD); India's merchandise exports expanded by 19.2% (Ministry of Commerce and Industry).

2005 to 2007: Strong global economic growth, with the world GDP growth averaging around 4.9% (IMF); India's GDP growth rate averaged 9.4% (World Bank) over the three years; expansion of IT and infrastructure sectors, with IT sector revenues growing at an average annual rate of 30% (NASSCOM); FDI inflows to India surged from $8.6 billion in 2005 to $34.8 billion in 2007 (UNCTAD); INR appreciated from ~ 44/USD to 39.4/USD bw 2005 to 2007 (RBI)

2009: Recovery from the global financial crisis; India's GDP growth rate at 7.9% (World Bank); government stimulus packages in India amounting to around $18.7 billion (1.5% of GDP) (Ministry of Finance)

2012: India's GDP growth rate at 5.5% (World Bank); implementation of economic reforms such as allowing FDI in multi-brand retail (up to 51%) and aviation (up to 49%); strong performance in agriculture (3.6% growth) and services sectors (8.1% growth) (Central Statistics Office); increased government spending on key infrastructure projects like the Delhi-Mumbai Industrial Corridor (DMIC) and the National Highways Development Project (NHDP).

2014: Modi government comes to power; India's GDP growth rate at 7.4% (World Bank); pro-business reforms and policies such as the launch of Make in India initiative and the easing of FDI norms; increased FDI inflows to $34.9 billion, up by 22.6% from the previous year (UNCTAD); growth in IT, manufacturing, and services sectors; development of Smart Cities and Digital India initiatives

2017: Implementation of the Goods and Services Tax (GST), streamlining indirect taxation; India's GDP growth rate at 7.0% (World Bank); continued FDI growth, reaching $44.9 billion (UNCTAD); formalization of the Indian economy; rise in digital transactions post 2016 demonetization; increased infrastructure spending on projects like the Bharatmala Pariyojana (Road Logistics) and Sagarmala (Ports)

2021: Economic recovery from COVID-19; rapid vaccination drive - 30% of the population fully vaccinated by September (Ministry of Health and Family Welfare); growth in IT, e-commerce, and healthcare sectors; increased foreign investment with FDI at $84.8 billion-FY2022 (Ministry of Commerce and Industry); government stimulus measures like Aatmanirbhar Bharat package(~15% of GDP) (Ministry of Finance); focus on self-reliance and domestic manufacturing through the Production-Linked Incentive (PLI) scheme.

Negative Years:

1998: India's nuclear tests led economic sanctions from US and Japan; Asian financial crisis and Russian debt crisis affected global markets; India's GDP growth rate slowed to 6.5% (World Bank); decline in global trade, with India's merchandise exports growing by only 1.6% (Ministry of Commerce and Industry); increased inflation in India (average annual rate -13.2%) (RBI); weakening of the Indian rupee, with the exchange rate going from around INR 36 to 41 per USD within the year (RBI)

2008: Sub-prime crisis ; low GDP growth ; Sharp decline in FDI

2011: Eurozone debt crisis, impacting global financial markets; high inflation rate, averaging 8.9% for the year (RBI); Low GDP growth rate and high fiscal deficit (5.9% of GDP) (Ministry of Finance); challenges in implementing policy reforms

Resilient Year:

2020: Year 2020 is considered in a separate category because this year nifty managed to increase 14.9% in the middle of a global pandemic. Thus the events here are sub categorized into adverse and favorable.

Adverse: COVID-19 pandemic; GDP contracted by 7.3%; Nationwide lockdowns and restrictions

Favorable: Massive economic relief package, Aatmanirbhar Bharat Abhiyan; repo rate at 4.0%

NIFTY Index CAGR

Nifty CAGR on 1st Jan 2023 at Index price of 18105.3 would be as follow from the following investment dates:

1. 31st Dec 1996 (Index-899.1) (Tenure:26-Years): 12.2%
2. 30th Dec 1999(Index-1480.45)(Tenure:23-Years): 11.5%
3. 30th Dec 2010(Index-6134.5)(Tenure:12-Years): 9.4%
4. 29th Dec 2017(Index-10530.7)(Tenure:5-Years): 11.4%
5. 30th Dec 1999(Index-1480.45)(Tenure:27-Years): 11.8%

Kindly Note, here point 3 has the lowest CAGR but one of the main contributer here is the 1st year i.e 2011(calender yr) index change was -24.6%.

Now, if a person would have invested a year later i.e start of 2012(Index-4624.3) and not at 6134.5. She would have yielded a CAGR of 13.2% as on 1st Jan 2023.The above data gives an abstract high level understanding of NIFTY50 Index returns.

We generally return ~9% over and above NIFTY CAGR by deploying quantitative risk management using Index derivatives.