Five Years of Nifty 50 Returns: What Do the Numbers Reveal?

Five Numbers Instead of One

"The Nifty has given 13% a year over five years." It is a common way to describe Indian equity returns, and it is accurate for one specific window. But one number hides most of what an investor actually experienced. This piece looks at the same five years from several angles.

The Year-by-Year Record

Source: NSE closing values.

Over the five years, the index rose about 87%, a compound annual growth rate (CAGR) of about 13.3%.

Finding 1: A Good Average Hides an Uneven Path

No single year returned 13.3%. Two years delivered more than 20%, and two delivered less than 10%. An investor who started in 2022 waited a full year for a 4% gain, while an investor who started in 2023 earned 20% in the first year.

This matters for expectations. A plan built on "13% a year" will face years that look like failures and years that look like windfalls. Neither is unusual.

Finding 2: The Start Date Changes the Answer

Five-year returns are very sensitive to where the window begins and ends.

• End-2020 to end-2025: about 13.3% a year.
• Mid-October 2021 to mid-October 2026: about 4.5% a year. The Nifty was near a record of around 18,400 to 18,500 in October 2021. By 16 October 2026, after falling about 11% in 2026 so far, it was at about 23,150.

Same index, overlapping periods, and one return is about three times the other. The difference comes almost entirely from where the window starts and ends: just after a weak year, or near a peak.

This is why fund factsheets, brokers and news reports can all quote "five-year returns" that look very different. Always check the dates.

Finding 3: Dividends Add a Little, Inflation Takes a Lot

The figures above are price returns. Nifty companies also pay dividends, typically adding around 1% to 1.5% a year. The Nifty 50 Total Return Index, which reinvests dividends, captures this.

Inflation works the other way. Retail inflation in India averaged roughly 5% a year over this period, higher in 2022 and lower in 2025. So the real return, after inflation, was closer to 8% a year for the 2021 to 2025 window, and close to zero for the October 2021 to October 2026 window.

Finding 4: In Dollars, the Story Is Different

For a foreign investor, returns are measured in dollars. A US-listed ETF tracking the Nifty 50 returned about 19%, -7%, 17%, 3.5% and 5% in the five years from 2021 to 2025, including dividends. That compounds to about 41% in total, or about 7% a year, roughly half the rupee return.

The gap is mostly the rupee, which weakened from about 73 per dollar at the end of 2020 to about 90 at the end of 2025, plus fund fees. It helps explain why foreign investors and domestic investors can view the same market so differently.

Finding 5: Price Alone Hides the Drivers

An index return combines earnings growth and a change in the valuation multiple. Splitting these needs index earnings data, which NSE publishes along with the index P/E. One caution: NSE moved the Nifty P/E from standalone to consolidated earnings in 2021, so P/E figures from before and after are not directly comparable.

Limits of This Look

• Five years is short. Over fifteen or twenty years, start-date effects shrink.
• The index is not a portfolio. Investors pay fees and taxes and rarely invest a single lump sum at year-end.
• SIP investors had a different experience. Monthly investing spreads the start date, so SIP returns are less sensitive to any one entry point.

Habits for Reading Return Figures

1. Check the start and end dates of any return quoted.
2. Ask whether it is price or total return.
3. Subtract inflation to see the real return.
4. Note the currency the return is measured in.
5. Look at the year-by-year path, not just the average.

The Reframe

A five-year return is not a property of a market. It is a property of a market and two dates. Change the dates, the currency or the inflation adjustment, and the same index tells a different story.