In the last 5 years, India's benchmark market index the Nifty 50 has had quite a rollercoaster 🎢 ride swinging in all sorts of directions by sky rocketing at times and also nose diving at other times leading to plenty of twists and turns. The volatility especially over the last couple of years has been immense and it's really taken both traders and investors for a ride. From the outset, it would look like the returns have been favourable at large but there have also been moments where it's been tepid and at times almost on a comatose mode.
Let's take a look at some of the numbers in actuality to see how the Nifty has actually performed. On 31st Dec 2019 Nifty closed at 12,168.45 with opening price witnessed on 1st Jan being just on the ball park of 12,200 with 12,202.15 being the exact number. From a starting base of 12,168.45, Nifty reached an all time high of 26,277.35 on 27th Sep 2024 and hit a lowest point of 7,511.10 on 24th Mar 2020 on the back of the news over the Corona Virus outbreak.
There are a number of parameters affecting market performance. Uncertainty is probably the single biggest factor leading to market declines. One pattern which can be observed is that whenever markets have rescinded badly, they have bounced back equally well like a springboard with full force. This is not just over the last 5 years but generally across eternity. The falls have almost universally been really swift but the rises have been relatively slower leading to the popular coinage of the phrase 'Markets go down in elevator but rises through staircase'. But the underlying factor and undermining characteristic take away is that Markets always come back and eventually leap higher.
The last 5 years is a good indicator to understand the phenomenon of markets. There were number of worldwide events which crippled the index for a wee bit of time but it always found a way to get out of the crisis eventually moving higher and bolstering to new all time highs along the way. Let's look at some of the historic events that sabotaged the Nifty pulling it down from it's tracks and how it rebounded time and again.
As per stock market parlance, a fall from recent highs in points is usually associated with the following names
5% Fall - Pullback
10% Fall - Correction
20% Fall - Bear Market
30% Fall - Market Crash
50% Fall - Recession
2020:
The Nifty 50 index had reached a new all time high of 12,430.50 on the 20th Jan 2020 after which the pandemic in the form of Corona Virus took place hammering and tonking the markets almost beyond repair. In a small span of 2 months, the Nifty carted and caved in to fall towards a significant low point of 7511.10 leading to a brutal fall of almost 40% (39.58%). The markets however recovered sharply almost going up 100% first reclaiming the earlier all time high on 9th Nov 2020, then capturing the milestone mark of 13000 on 24th Nov 2020 and then hitting another significant landmark of 14000 on the last day of the year viz 31st Dec 2020.
2021:
Compared to the 'V' shaped recovery witnessed in 2020, the year 2021 was relatively less chaotic. The magical milestone mark of 15,000 was reached for the first time on 5th Feb 2021 catapulting to an unassailable 100% rise from the lows witnessed just 10-11 months back in March 2020. The Nifty hit a new high of 15,431.75 on 16th Feb 2021 after which it saw a consolidation for about 3 months before again regaining a new high on 28th May 2021. The Nifty was teetering along these levels for a while before getting to the landmark of 16,000 for the first time on 3rd Aug 2021 and in the very same month usurped itself to another historic high of 17,000 on 31st Aug 2021. 18,000 also was reached very fast on 11th Oct 2021 and it went on to hit a high of 18,604.45 on 19th Oct before retracing and entering into correction territory on 20th Dec reaching a low of 16,410.20 on the back of re-occurrence of new covid variant in the name of Omicron.
2022:
2022 could be summarised as a pretty weak year for Nifty with no new 1000 mark milestones reached all through the year. In fact it was a year which saw 2 major corrections of over 10% in a pretty short span of time. After the low hit in Dec 2022, markets rallied a bit upto levels of 18,350.95 seen on 18th Jan but couldn't go past it's earlier high of 18,604.45 on 19th Oct 2021. The markets in fact started grinding down breaking the Dec low and touching a new low point of 15,671.45 on 8th Mar during the wake of the Russia - Ukraine war. Just when markets were looking like arresting this horror run claiming back the mark of 18,000 in early April came another rude shock in the form of US Fed Rate hike making the markets tank towards levels of 15,183.40 seen on 17th June 2022. This was the second biggest fall for the Markets by over 18% after the Covid crash in Mar 2020. The Markets however found the resurgence to bounce back like it always does to generate a new life time high of 18,887.6 on 1st Dec. It took Nifty over a year to reclaim it's previous all time high made on 19th Oct 2021 to get it back on 28th Nov 2022. It was a turbulent year but the ending was a saving grace helping Nifty to close in the green for another year running.
2023:
Nifty had starting trouble in 2023 meandering it's way in the early part and then starting to go down with 17,000 being broken resulting in another correction of over 10% on 14th Mar largely due to domestic retail inflation remaining above tolerance level in addendum to the Adani saga pertaining to accusations made by the American firm Hindenburg. The fall however stopped at 16,828.35 at close to 11% from recent highs leading Nifty to stage a recovery once again. 17,000 was captured immediately and then 18,000 also was obtained again within less than a month and half finally paving the way to fresh highs registered on 29th May 2023 with the previous high of 1st Dec 2022 being taken out. Within a month on 28th June came the coveted figure of 19,000 for the first time and very soon on 11th Sep came the monumental mount everest milestone of 20,000. Just shy of 3 months occurred the new landmark of 21,000 on 8th Dec. Nifty marched along to reach a fresh new high of 21,801.45 towards the end of the year. Thus it could be said that 2023 was a year in which the start floundered but the end resulted in a flourish.
2024:
The Nifty began 2024 on a high note reaching the rippling summit of 22,000 on 15th Jan. This was followed by another cherished record of 23,000 hit on 24th May. 3rd Jun saw Nifty reach a peak of 23,338.70 on the back of exit polls giving a unanimous verdict towards BJP winning the Lok Sabha elections with overwhelming majority. The next day 4th Jun witnessed a rout of epic proportions as the actual results didn't meet the pollsters expectation with the Nifty tonking towards a low of 21,281.45 resulting in a cut of 2057.25 points from earlier day high leading to a cut of 9% on a single session which was the biggest ever since the Corona fiasco in March 2020. The Nifty recovered quite a few points on the same day and did a torpedo run regaining all it's lost points and surpassing itself to a new high in less than a week on 10th Jun. The fall and rise which happened so spectacularly swiftly was truly unprecedented. Very soon in the same month came the new landmark of 24,000 on 27th Jun. This did not stop as Nifty had more legs to run with 25,000 being scaled on 1st Aug. There was a small top out here with Nifty falling over 1000 points breaking even 24,000 due to news of unwinding of Yen carry trade in Japan along with recently announced weak US jobs and inflation data. This was however really shortlived as Nifty again continued on it's upsurge after the low of 23,893.70 on 5th Aug. The momentum didn't seem to suppress as another breakthrough of 26,000 was conquered on 24th Sep. Nifty ended up with a personal new best of 26,277.35 on the 27th of Sep. Nifty bottomed out after this with the last quarter being very weak starting with a heavy fall in Oct largely on the back of not up to the mark earnings by major corporates coupled with a huge spree of selling by Financial Institutional Investors (FIIs). There was a fall of almost 2000 points in Oct alone and Nifty eventually hit a low of 23,263.15 on 21st Nov cutting back over 3000 points from it's most recent high of 26,277.35 in Sep. Some recovery was seen in Dec with Nifty getting to 50% retracement levels from the lows but it was eventually sold into with Nifty not even able to reach back the mark of 25,000 let alone 26,000. Nifty finally ended the year well shy below the mark of 24,000 at 23,658.15 to be precise leading to close in the green on a year on year basis for the 9th straight year in a row since 2016.
Summarising briefly on all the 10% plus corrections in Nifty over last 5 years
March 2020 - Nifty hit a life time high of 12,430.50 on 20th Jan 2020 and then fell to a low of 7511.10 on 24th Mar leading to a cut of 4919.40 points taking into Bear Market territory by falling 39.58%. This was mainly due to the Covid pandemic spreading far and wide globally
December 2021 - Nifty hit a life time high of 18,604.45 on 19th Oct 2021 and then fell to a low of 16,410.20 on 20th Dec leading to a cut of 2194.25 points putting it into correction territory by falling 11.79%. This was largely due to the double risk of re-occurrence of new Covid variant spread along with a spike in global inflation threatening economic recovery
March 2022 - After hitting a lifetime high of 18,604.45 on 19th Oct 2021, Nifty fell below 10% and recovered again beyond 18,000 reaching a recent near time high of 18,350.95 on 18th Jan but it couldn't sustain resulting in a pendulum like fall touching a low point of 15,671.45 on 8th Mar leading to a cut of 2933.00 points putting it back into correction territory by falling 15.77%. This was largely due to the escalation of the Russia Ukraine war.
June 2022 - Nifty again recovered sharply after the deep fall in March reclaiming the 18,000 mark once again hitting a near term top of 18,114.65 on 4th April on the day when the news of the merger between HDFC & HDFC Bank broke out. However it again failed to take back it's previous high and this time fell even more severely to levels of 15,183.40 witnessed on 17th June from the last all time high of 18,604.45 on 19th Oct 2021 leading to a cut from recent highs of 3421.05 putting it almost close to Bear market territory by falling 18.39% from last all time high. This was due to US Fed hiking rates.
March 2023 - After ending 2022 on a high with a new lifetime high touched on 1st Dec 2022 of 18,887.60, the markets again started going downhill in 2023 with a low reached of 16,828.35 on 20th Mar 2023 leading to a cut of 2059.25 points putting it back into correction zone by falling 10.90%. This was largely due to domestic retail inflation going beyond the threshold levels.
November 2024 - After the very recent high of 26,277.35 made on 27th Sep 2024, Nifty started colliding downwards with an extremely weak October month which continued onto November leading to a plummet towards levels of 23,263.15 thus falling by over 3000 points with 3014.20 points being exact making it go back to correction territory in a small time frame of less than 2 months by falling 11.47%. This was largely due to sluggish corporate earnings in addition to record selling by FIIs.
Thus, if one looks at it from a panoramic view, markets undergoes shifts resulting in turbulence of all kinds. Markets can move due to multiple reasons such as Health (Covid 19 pandemic, Second Wave etc), War (Russia vs Ukraine, Iraq war etc), Economy (Interest rate, Inflation, Currency Exchange, Dollar Index etc), Politics (Election results, Policy changes etc), Finance (Corporate Earnings, Company Performance etc), Data (Jobs, Taxes, Unemployment etc), News (Breaking news of Deals/Merger, Scandals & Fraud accusations such as Hindenburg on Adani etc), Competition (Other Avenues like Bitcoin/Commodities, New player in the market making inroads etc), Technology (Newer innovations like Artificial Intelligence, Measures to increase scale/production etc), International (Global Headwinds, Other Markets Cascading effect etc).
Looking at the outlook ahead for Nifty, viewing past data is a reasonable indicator. Many of the events which occurred in the last 5 years were unexpected and uncertain but still Nifty was able to hold it's head high and wade through troubled waters. The upcoming years also may spring plenty of negative surprises for which one has to factor in and be prepared for. One thing for certain is that as long as the world continues to be unpredictable, the markets will replicate the same and lead to corrections time and again in the years to come as well. But, having said that if the economy is able to sustain and grow despite whatever comes it's way and if that's also resonated with robust company earnings and clocking of good performances, one can be rest assured that markets will continue to soar and reach new heights in the years to come. Having seen a swing of close to 20,000 points from the low and high points across the period of 5 years from 2020-2024, anything is possible but on a reasonable estimate, one can expect Nifty to cross the milestone of 30,000 and the Grand Old Index Sensex to touch the 6 figure mark of 100,000 in the next 2-3 years. Without further ado, the golden rule and motto of staying invested holds good with patience eventually bearing fruit and reaping reward in the long run.
Sharing a small synopsis of year on year Nifty trend in addition to overall performance across 5 years.
