Markets

A Story in Charts: How India’s Equity, Gold and Debt Investments Have Performed Over the Last Two Decades

A Story in Charts: How India’s Equity, Gold and Debt Investments Have Performed Over the Last Two Decades

Indian stock markets have been among the best performers this year, with the Nifty50 benchmark beating some of the world’s biggest bourses including the S&P 500, Dow Jones, Nikkei and FTSE.

This despite record sales by a foreign investor in 2022 – totaling ₹2.6 crore till date. One of the reasons why Indian markets are holding strong is the strong buy-in by domestic investors – Indian investors and mutual funds have collectively made back over ₹2.3 lakh crore, so the pain of the FII sell-off is not felt yet.

With Indians opening three new demat accounts every four seconds since 2020, now is a good time to review how Indian markets have fared in terms of investor returns.

Here’s an overview of how Indian stock markets have fared compared to their global counterparts:

Index YTD performance
Nifty50 0.15%
Sensex 0.10%
FTSE 100 -3.58%
Nikkei 225 -5.92%
Dow Jones -15.75%
S&P 500 -19.25%
DAX -20.47%
Nasdaq -27.69%

Note: As of September 19, 2022


But when it comes to investing, what matters is the returns over a longer period – it could be 5 to 20 years.

And there is an interesting story to be told here.

India vs. US – which markets performed better?

The concept of gaining exposure to US markets and including geographic diversification in an investment portfolio has gained popularity recently.

In this context, it is important to understand how the US markets have fared compared to India.

Over the last 1 and 3 years, Indian markets have outperformed the US. In fact, over the past year, Indian markets have delivered much better returns than the US, according to a FundsIndia report.

However, in the medium to long term – 5, 10 and 15 years, the US markets produced better returns.

READ ALSO :   Zambian Finance Minister Keen on Debt Re-negotiation, China Team Waiting

Ultimately, however, over a 20-year investment horizon, the return to the Nifty50 investor is 17% per annum, while in the US this figure drops to 12.6% (S&P 500).

Annualized returns of Nifty50 vs S&P 500Business Insider India / Flourish

1 lakh invested in Nifty50 two decades ago is worth that much now


A similar trend is seen when it comes to money multiplication – essentially a measure of how much your money has multiplied since your investment.

A Story in Charts: How India's Equity, Gold and Debt Investments Have Performed Over the Last Two Decades
Nifty50 vs S&P 500 Money MultipliersBusiness Insider India / Flourish

If you had invested 1,000,000 CZK each in Nifty50 and S&P 500 20 years ago, your money would have been worth 23.1,000,000 CZK and 10.6,000,000 CZK.

It is worth noting that US returns have been adjusted for the US dollar exchange rate.

Read also

These are the best and worst performing Nifty indices in 2022 so far

These are the best and worst performing Nifty indices in 2022 so far

With foreign investors pulling out of India in record numbers in 2022, it’s worth looking at how Indian markets have fared compared to their US counterparts. Indian investors’ interest in equity markets has also grown rapidly – from 3 new demat accounts every 4 seconds to record growth in SIPs, Indians are hungry to invest money. Here’s a look at how India’s equity, gold and debt markets have fared over the past two decades.

Equity vs Debt vs Gold – No surprises here


Investment advisors typically recommend diversifying investments across asset classes. This advice is also based on your risk profile. The basic idea is higher risk, higher reward and vice versa.

When it comes to the age-old question of equity vs. debt vs. baby, it’s no surprise that stocks tend to outperform. It may also fall more, but in the longer term it still comes out against debt and gold.

READ ALSO :   Goldman Sachs closed a $9.7 billion private equity fund, the largest since 2007

Stocks have beaten gold and debt in terms of annual returns in all but one case — gold has returned 11.3% over the past 15 years, while stocks have returned 11%.

A Story in Charts: How India's Equity, Gold and Debt Investments Have Performed Over the Last Two Decades
Annualized returns on stocks vs gold vs debtBusiness Insider India / Flourish

A similar pattern is visible when it comes to money multiplication.

A Story in Charts: How India's Equity, Gold and Debt Investments Have Performed Over the Last Two Decades
Equity vs Gold vs Debt Money MultipliersBusiness Insider India / Flourish


Big Cap vs. mid cap vs small cap – which should you prefer?

Another aspect when considering investment options is the market capitalization category in which to invest. This is broadly divided into three categories – large, medium and small.

Interestingly, the mid-cap segment has performed better compared to the large and small caps, both in the short-term and the long-term. On the other hand, returns to large and small caps have seen more neck and neck.

A Story in Charts: How India's Equity, Gold and Debt Investments Have Performed Over the Last Two Decades
Annualized returns with large vs. medium vs. small capitalizationBusiness Insider India / Flourish

A similar trend is also visible in the case of money multiplication, where mid-caps with a longer investment horizon are far ahead of large and small companies.

A Story in Charts: How India's Equity, Gold and Debt Investments Have Performed Over the Last Two Decades
Money multipliers with big vs. medium vs. small capitalizationBusiness Insider India / Flourish

SEE ALSO:

Anil Agarwal – How a Bihar boy who only knew ‘yes’ and ‘no’ became India’s first company to go public on the London Stock Exchange

For every ₹100 withdrawn by foreign investors from Indian stock markets this year, domestic investors have withdrawn ₹89

These are the best and worst performing Nifty indices in 2022 so far

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

The Latest

To Top