Nifty Annual Returns – Historical Analysis (Updated 2019-2020)

[Updated – January 2019]

What have been Nifty annual returns?

What has been Nifty 50 annual returns?

What have been Sensex annual returns?

What have been stock markets annual return given in last 1 year?

What have been Nifty returns since inception?

What have been Nifty returns in last 20 years?

What have been Nifty returns in last 10 years?

What has been Nifty CAGR or the average Nifty returns till now?

These are some questions that gain popularity as the year comes to an end.

During this time, we all have this uncontrollable urge to ‘know’ how markets have done in last one year. And how it compares to annual returns of the last few years.

Ofcourse, one should be interested more in how their portfolio is performing and whether they are on track to achieve the returns (%) required to achieve their financial goals.

But still, we do get attracted to annual return figures. Isn’t it?

So as we have completed another year, I have decided to analyse annual returns of widely tracked market index Nifty50 – a widely tracked index of the Indian stock markets, which is made up of shares of 50 largest Indian companies.

Nifty50 closed 2018 with gains of about 3.2%.

After a lot of upheavals and volatility, 2018 did not turn out to be a very great year for the markets. But this comes on the back of a good 2017 – which was the best since 2014 and second best since 2009!

How does this compare with the averages?

Nifty has a CAGR of 13.4% in the last 20 years (since 1998) and 13.89% in the last 10 years (since 2008).

But that is the nature of markets. The average figures will not be achieved every year. Also for SIP investors, it is important to understand that these returns will be different from your rolling SIP returns (but we will discuss that some other day).

So below is the Nifty historical chart showing annual Nifty returns since 1996 (i.e. 2+ decades):

Nifty Annual Yearly Returns 2018 2019

To see this from another perspective, have a look at the table below. It gives you the current value of Rs 1 lac invested in Nifty50 every year since 1995-96:

Nifty Annual Performance 2018 2019

As already mentioned, looking at average figures has its own pitfalls. An average of 12% annual returns might sound great on paper. But it requires you to witness -30%, +20%, 5%, -15%, 13%, etc. for few years. You won’t get that 12% fixed returns, no matter how much you want it. 🙂

So obviously, the 2-decade long journey has been a volatile one. In the last 22 years, we have had:

  • 16 years with positive returns
  • 7 years with negative returns

You might draw out the conclusion that more often than not, markets will give positive returns.

That is true. But how much of that return will be captured in your portfolio is another matter.

So if you had invested somewhere in 2002-2003, the annual index returns after that have been 3.3%, 71.9%, 10.7%, 36.3%, 39.8%, 54.8%. And this is not normal. This was unprecedented and chances are high that such a sequence of high positive returns, might not get repeated again for many years if not decades. So do not have such expectations of multi-year high returns from stock markets.

Infact, we should be ready to face ugly years like 2008-2009 – when index itself fell by more than 50% and individual stocks crashed by 80-90%. I have said countless times that one should invest more in market crashes or when everyone else is giving your reasons to not invest. But that is easier said than done. When a crisis like the one in 2008-2009 comes, it is not easy to combine your cash with courage.

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But that is what separates poor investors from good ones and, good ones from great ones.

Now we have seen Nifty’s historical annual returns for last 20+ years. But that gives us only 23 data points to look at (even though it covers Nifty returns since inception). And that is not sufficient to draw out any meaningful conclusions.

Ofcourse it is interesting to look at annual return figures. These give us a benchmark to compare our own portfolio’s performance.

But it is very important to understand what these annual figures won’t tell you. We can pick and choose data to prove almost anything – as it has been rightly said – “Torture numbers, and they’ll confess to anything.”

You might find people telling you that markets can give you 15-20% returns. And they might even show you data to prove it. But just picking one particular Nifty 5 year return period or even a 10-year period will never give you the complete picture. You need to see how markets have behaved in ‘all’ such 5-year and 10-year periods.

So when talking about annual returns, lets not just evaluate year-end figures. Instead, let’s analyse rolling 1-year returns. That will give us a better picture.

Nifty historical data is available starting from July 1990. So that is where we start.

Now to calculate one-year rolling returns, we pick every possible 1-year period between July 1990 and Dec-2017 (on a daily basis).

So we have the following:

  • 3rd-July-1990 to 3rd-July-1991 – 1st one-year period
  • 5th-July-1990 to 5th-July-1991 – 2nd one-year period
  • 29th-Dec-2017 to 31st-Dec-2018 – Last one-year period

In all, there were about 6641 rolling one-year periods.

And this is what Nifty did in these several thousands of one-year periods:

Nifty Rolling 1 Year Returns 2018

And here is the graph of these returns (since 1997):

Nifty Rolling 1 Year performance 2018

If you study the graph carefully, you will find interesting things. Some 1-year periods have seen returns of more than 100%. But there are also periods of major cuts (like the early 2000s and 2008-2009).

Now one obvious thing to note here is that when rolling returns are low for some time, then chances are high that rolling returns will increase in near future (as can be seen in sharp up moves after low returns in the above graph).

You might see it from the PE-lens of investing more at lower PEs or investing more when Nifty performance in last few years has not been good.

I leave it up to you to draw out your own conclusions.

Another important point to note here is that these graphs and tables are based on Nifty50 index levels. It does not reflect the impact of dividend reinvestments.

The index that captures ‘dividend reinvestments’ is called the Total Returns Index (TRI). So basically, Total Returns Index or TRI is Nifty including Dividends.

I won’t be doing the detailed annual or rolling annual return analysis of TRI here.

But to give you a perspective of how dividend reinvestment can impact your returns, I will compare the regular Nifty50 with TRI here:

Nifty Total Return Index 2018

As you can see, there is a decent difference in index levels (with and without dividend reinvestments). It is for this reason that one should try to reinvest the dividends as much as possible.

Now 2018 didn’t turn out to be a very good year for most market participants (after 2017 being a really good one).

But for long-term investors, a year of low returns would bring in a lot of opportunities if we are observant enough. And I am not just talking about index levels here. Even individual stocks offer various opportunities by oscillating between their 52-week highs and lows.

As for 2019, there is no point in predicting what will happen.

So let’s not rush and instead, wait for another 365 days to see how next year’s Nifty 50 annual returns turn out to be.

Note – If you want a similar analysis for Sensex annual returns, then do check out Sensex Annual Returns Analysis (20+ years).

Written by Dev Ashish

Founder - Stable Investor Investing | Personal Finance | Financial Planning | Common Sense

8 comments

  1. Hello Dev, Thank you for this great piece. I need your help with the distribution chart you made on the 6000+ 1 year rolling returns. I am trying to recreate the same myself and am stuck. If you could point me towards the right direction/tool in excel it would be very much helpful to me. Thanks in advance.

  2. We really need some major bad news to trigger a bear market of sorts. I am not too excited about entering the market at these overvalued levels to be honest. Yes, I did miss out on the gains during the last 7 months of 2017 as I chose to move into cash and remain on the sidelines but it was a conscious decision and I have no regrets.

    I would much rather make my exemplary gains and exit the market early and miss out on some gains than stay invested through a bear market and see all my gains wiped away. The stock market can give incredible returns. It’s averages down to 10-12% returns over a long time because people who don’t understand the market choose to remain invested through the crashes.

  3. Hi Dev,

    What’s important to also note here is that a positive return for NIFTY doesn’t mean your money grew adjusted for inflation. For eg, if you consider the investment on 31 Dec 2007, which grew to Rs. 1.71 lakhs in 10 years ending 2017, if you actually look at inflation values from 2008 to 2017, you’ll see that the 1.71 lakhs has much lower purchasing power in 2017 end than the 1 lakh in 2007 end. Basically, the stock market grew, but we lost money nonetheless. I’m using CPI numbers. Would be great if you can cross-check and add that nuance, since it is a critical one.

  4. nifty pe ratio time series from 99 till date throws interesting observations. I am with you on sitting out of the party for 2018.

  5. What I realize is NIFTY returns are definitely better than bank FD returns in the bracket of every two years starting from 2009. Almost all the Fund Managers claim they have given better returns than the Index. Given that SEBI should allow AMCs to come out with products with guaranteed returns in a span of 2-3 years which can be marginally better than bank interest. That will make lot of business sense for them instead of their mode of earning income only thru expense ratio today. In a bad time-frame they will lose and in a good time-frame they gain, stable market may give only marginal gains. But thats how any business works across the globe. Overall I feel regulator should allow Fund Managers to be more business-oriented with a win-win situation both for themselves and the investors.

  6. Dear ………..May I have some factual Idea that in last 15 years if one would have invested in a UTI Nifty Index fund then what would have been the % of ARI and TRI………means …………How to get it understatnd the difference of ARI and TRI practically………..

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