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Nifty generated 13.4% compound annual growth rate over last 32 calendar years. Essentially this implies doubling of the nifty every 67 months.
The beauty of this CAGR is so well reflected in the nominal gross domestic product growth of 12-13%. So while the Nifty and the GDP react to all sorts of near term noise, over time they converge to deliver closer to 12-13% growth odd over long period averages.
Nifty midcap comes out as the best performing front line index with 19.2% CAGR over two decades.
Nifty smallcap is the underperformer– Intuitively this is at variance. However this is probably reflectively of the earnings and valuation volatility as well. This is highlighted by the sharp negative years followed by very strong recoveries.
Nifty Bank follows close with 19% CAGR over 22 calendar years. However returns over last few years have been trending positive led by fundamental tailwinds.
Metal and real estate come out as the underperformers, fast moving consumer goods returns corroborate its status as a bellwether – only one instance of negative return over last 13 calendar years.
IT Index has had a negative return year after positive run of five calendar years. Coincidentally it is more often than not for the IT Index that one negative is followed by another negative year usually. But that’s not a prediction.
Autos return inline with CAGR trends, but trailing long period rolling still. Pharma finished with a negative read.
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