Nifty50 in seventh heaven: For the seventh consecutive year, the headline index NSE Nifty50 has reported positive returns! The Nifty celebrates a new milestone in 2022 by touching a blissful high of 18,888, before closing the previous calendar year at 18,105 levels with marginal gains of around 4 per cent.

COMMERCIAL BREAK
SCROLL TO CONTINUE READING

The last seven years would go down in the annals of history as the many eventful years comprising volatility, unpredictability, divergence, pessimism and optimism. Domestic brokerage Motilal Oswal, looking back at seven years journey, share some of the exciting aspects of this illustrious voyage.

Below are the top 10 highlights the markets achieved in the last seven years:

1. Over the last seven years (Calendar Year 2016-2022), Nifty has consecutively delivered positive returns despite a multitude of disruptions such as demonetisation, implementation of Goods and Service Tax (GST), Covid-19 among others along the way.

2. The Nifty50 delivered a 14 per cent Compound Annual Growth Rate (CAGR), up 2.2 times during this seven years period. The last such rally was seen way back in 2002-2007, when the benchmark rallied for six consecutive years clocking a CAGR of 41 per cent, up 5.6 times.

3. Notably, even though the index was up for seven years in a row, there are only two sectors – Oil & Gas and Financials, which have delivered positive returns in all these seven years.

4. Only two of the Nifty50 stocks, Reliance Industries, and HDFC Bank – Index heavyweights – have delivered positive returns in each of these seven years. However, none of these stocks has outperformed the benchmark in all these seven years.

5. Four stocks have outperformed Nifty50 in six out of seven years – Reliance Industries, Bajaj Finance, Adani Enterprises, and JSW Steel.

6. Coal India has underperformed the benchmark index in six out of seven years, while five stocks BPCL, Cipla, Dr Reddy’s Labs, ONGC, and Tata Motors have underperformed in five out of seven years.

7. Within Nifty50, Bajaj Finance and Asian Paints decline first time in 2022, after ten consecutive years of positive returns.

8. Among the Nifty50, prices of 27 companies grew at a faster pace than their profits, signifying re-rating. Further, nine companies within Nifty reported re-rating of more than 10pp during CY16-22.

9. Foreign Institutional Investors (FII) flows: During the last seven years, FIIs have invested US $30.4 billion cumulatively in the Indian market, with only two years of outflows.

10. Domestic Institutional Investors (DII) flows: With just one year of outflows since 2016, DIIs have invested US $80.5 billion cumulatively with US $32.2 billion of investment in 2022 alone.

Will Nifty’s Dream Run Continue?

Markets in 2022 have been highly volatile and jittery led by a multitude of global and domestic macro headwinds. However, despite these challenges, the Indian indices showed remarkable resilience and outperformed the global markets significantly.

Positive triggers: Deceleration in the pace of inflation and any resolution in the Russia-Ukraine conflict can provide a relief, thus allaying the pressure on central banks to raise rates further.

Negative triggers: India’s economic growth is likely to moderate in the second half of the current fiscal (H2FY23) – the RBI is projecting a GDP growth of 4.3 per cent. This may have an adverse implication on demand and in turn, the corporate earnings.

Interesting Facts With Nifty Returns

2016 (3 per cent): Flat returns marked by major disruptive events such as demonetization.

2017 (29 per cent): India enters the GST regime. Markets scale new highs; domestic equity flows at its peak.

2018 (3 per cent): The year of modest returns; IL&FS crisis blows up with NBFC (non-banking finance company) crisis along with elevated volatility across the board.

2019 (12 per cent): GDP growth decelerates notably. Market rallies within a narrow band as the Nifty reclaims 12000 level.

2020 (15 per cent): The year of Covid-19, volatility and unpredictability.

2021 (24 per cent): The year of recovery and heightened activities on multiple fronts.

2022 (4 per cent): India stands out in the global arena – outperforms significantly.