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Nifty Annual Returns: Historical Analysis (Updated 2024-25)

Dev Ashish

[Update]: Annual Nifty Returns updated on 31st December 2024 to show full-year actual returns.

What were Nifty 50 annual returns in 2024?

Or you may have more general questions like:

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 the last year. And how it compares to the annual returns of the last few years.

Of course, 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 the annual returns of the widely tracked market index Nifty50 – a widely tracked index of the Indian stock markets, which is made up of shares of the 50 largest Indian companies.

Nifty50 closed the calendar year 2024 with gains of about 8.8%.

How does this compare with the averages?

Nifty has a CAGR of 12.92% in the last 20 years (since 2004) and 11.06% in the last 10 years (since 2014).

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):

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

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 a few years. You won’t get that 12% fixed return no matter how much you want it. Why? Because you only get returns you deserve. 🙂

So obviously, the 2-decade-long journey has been a volatile one. In the last 25 years, we have had:

You might draw the conclusion that more often than not, markets will give positive returns. In fact, in the last 11 years, Nifty had just 1 negative year!

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%, and 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.

In fact, we should be ready to face ugly years like 2008-2009 – when the 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 the last 25+ years. But that gives us only 26 data points to look at (even though it covers Nifty returns since inception). And that is not sufficient to draw out any meaningful conclusions.

Of course, 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, let’s 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.

Note – (The below section updated only till 2019 and not to the present day)

Now to calculate one-year rolling returns, we pick every possible 1-year period between July 1990 and Dec-2019 (on a daily basis).

So we have the following:

In all, there were about 7134 rolling one-year periods.

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

Updated till data of December 2017

And here is the graph of these returns (since 1997 and till 2018 only):

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 the near future (as can be seen in sharp-up moves after low returns in the above graph).

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

I leave it up to you to draw 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, the 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:

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 2019 didn’t turn out to be a very good year for most market participants (and that is after even 2018 was also a pretty bad year for everyone).

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. I hope you found this Nifty Annual Returns 2024 analysis useful.

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

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