Nifty turns 25: Here's how the index progressed from 1,000 to 14,000

It has been 25 years since the National Stock Exchange (NSE) introduced its benchmark Nifty index, a gauge for the performance of the country’s 50 blue-chip stocks. The index was set up on April 22, 1996, less than two years after the exchange launched electronic screen-based trading. 

Today, the Nifty 50 index is the most-traded derivatives index. It is also the most-tracked index by domestic exchange-traded funds (ETFs) with assets under management of $18 billion (Rs 1.35 trillion).

The complexion of the index has undergone a drastic change since its inception. Back in 1996, State Bank of India (SBI) had the highest weightage at nearly 8.6 per cent, followed by Tata Motors at 6.9 per cent. While both the stocks continue to be part of the index, they are no longer in the top 10, both in terms of market cap as well as weightage. Reliance Industries is currently the highest weighted stock, followed by HDFC Bank.

Today, the index is dominated by banks and financial stocks. Back then, banking stocks were an important part of the index, but their combined weightage was below 20 per cent — half that of now.

Out of the 50 components, only 14 are common between 1996 and 2021; several manufacturing and old-economy stocks have been pushed out of the index over the years. HDFC Bank has generated the highest annualised returns in this period, at 32 per cent.

“India’s real GDP has recorded 8 per cent CAGR between 1996 and 2021. The Nifty return of 11 per cent CAGR has also surpassed the gold return of over 9 per cent CAGR during the period,” says Binod Modi, head of strategy at Reliance Securities.