Nifty's journey from 1,000 to 11,500 levels: All you need to know

The only constant in the last 16 years has been RIL, which has maintained its position in the top 10 in Nifty50 index

As Nifty50 hit a lifetime high of 11,581.75 on Tuesday, it is notable to know that the index hovered around 1,000 levels in back in 2002. 

Over these 16 years, the representation in Nifty50 index has undergone a sea change in consonance with the changes in the underlying economy. As new sectors and companies evolved, their stocks found place in the benchmark index. Some, on the other hand, lost relative importance. 

The only constant over the last 16 years in the index has been Reliance Industries (RIL), which has maintained its position in the top 10 in Nifty50 index, finds a recent study by Motilal Oswal Securities.

Here are some key noteworthy points of Nifty50’s journey from 1,000 to 11,500 levels as compiled by Motilal Oswal Securities:

1. Only 38 per cent (19 stocks) of the Nifty constituents have consistently remained on the index since December 2002. The combined weight of these 19 stocks has declined to 61.4 per cent from 73.1 per cent around 16 years ago. 

2. From the Nifty constituents of 2002, M&M is the best performing stock with a compound annual growth rate (CAGR) of 31 per cent, while MTNL is the only stock to deliver negative returns.

3. Notably, 13 stocks that got listed over the period – Maruti Suzuki (listed in July 2003), TCS (August 2004), UltraTech Cement (August 2004), NTPC (November 2004), Yes Bank (July 2005), Tech Mahindra (August 2006), Power Grid (October 2007), Adani Ports (November 2007), Bajaj Auto (May 2008), Bajaj Finserv (May 2008), Coal India (November 2010), Bharti Infra (December 2012) and Indiabulls Housing (July 2013) – are part of the index now

4. Staying in the top-10 is not easy. Over the last 16 years, Reliance Industries (RIL) is the only stock to have maintained its position in the top-10 in Nifty50. However, the stock's weight in the index has declined from 12.3 per cent in December 2002 to 9.4 per cent in August 2018.  

5. The weight of Financials has seen a secular rise in the benchmark indices. Private Financials now contribute 34.3 per cent (+5x in 16 years) of Nifty50. It can expand even further given that the index doesn’t have any representation of Insurance yet. 

6. Technology’s weight (13.7 per cent) is showing signs of revival after slipping to a five-year low of 11.4 per cent in 2017, while, PSU’s weight in the index is at an all-time low of 9 per cent. We see very low possibility of new additions in that space.

7. Since its base period (November 1995), the Nifty has delivered a CAGR of 11 per cent. However, its total market cap is up 56 times, implying a 19 per cent CAGR. Notably, since December 2002, the total market cap is up 24 times, implying a 23 per cent CAGR. However, the Nifty has delivered a CAGR of 16 per cent.