The market has been under pressure over the past year with rising inflation amid slowing economic growth. However, Indian markets managed to outperform major global indices in 2022. In this edition of Chart of the Week, we take a look at the major Nifty sectora indices and their shift since 2006, tracking 14 years of data.
During 2007-09, the Nifty Energy index was among the top and highest-rising indices in India. The index rose 97.6% and 58.1% in 2007 and 2009 respectively. In 2008, the index declined 47.4%, as the year witnessed the Great Recession. As of 2022, the Nifty Energy index has risen at a compound average growth rate (CAGR) of 9.9% over the past 16 years.
It was a particularly gruesome year for investors as the global financial crisis hit the world in 2008, causing all major indices to decline. However, in 2009, all major indices recovered, with the Nifty Auto and Nifty IT indices growing the most, by 186.1% and 155.2% respectively.
2011 was a tough year for the banking sector in particular, as Nifty Bank declined 32.4%, owing to concerns about rising bad debts caused by a slowdown in economic growth. However, the index recovered in the years after, rising by 58.8% in 2012 and 64.7% in 2014. The Nifty Bank index has a CAGR of 13.1% over the past 16 years. In 2011, Nifty 50 and Nifty 500 also fell 24.6% and 27.2% respectively, their second-highest decline after the crisis of 2008.
However, Nifty FMCG rose by 8.6%, while Nifty Pharma fell the least among sectoral indices in 2011 as fast moving consumer goods (FMCG) and Pharmaceuticals are considered to be defensive sectors, which tend to be stable in a falling market. Owing to this, Nifty FMCG has a CAGR of 14.3% over the past 16 years, while Nifty Pharma has grown at a CAGR of 9.9%.
Nifty Energy and Nifty Bank witnessed a resurgence during 2016-19 and 2017 was especially good, as they rose 37.7% and 39.3% respectively. The Nifty IT index ended the decade till 2019 on a strong note and started the 2020s equally strong. It rose 55.6% in 2020 and 58.2% in 2021. However, 2022 was a difficult year owing to the rising inflation and interest rates all around the world and it declined 26%.
In 2022, investors switched to more domestic sectors which are not affected by global issues, and as a result Nifty PSU Bank witnessed a rise of 70.7%. With several macroeconomic factors at play in 2023, investors will have to wait and see how the indices fare going forward.
