Nifty, O Nifty! Tu kab Sensex banegi? Look where Nifty will end up going by their relationship thus far

Fast forward to 2018. NSE’s Nifty reached 11580, matching the earlier milestone of the BSE Sensex even as the benchmark of Asia’s oldest stock exchange soared to 38400.

The fact that there exists a correlation between the Sensex and Nifty is pretty much well-known but if the historical values of both the benchmarks are analysed, it throws an interesting trend – once almost every 10 years, the Nifty comes close to the Sensex value of the earlier decade.

Take a look at this.

In 1995, the 30-share Sensex was hovering around 3,470 while the broader 50-share Nifty stood at around 1,000 levels. By March 2006, Nifty had climbed to 3,470, reaching the same level that Sensex, which was trading at around 11,580, had achieved a decade earlier.

Fast forward to 2018, NSE’s Nifty reached 11,580, matching the earlier milestone of the BSE Sensex even as the benchmark of Asia’s oldest stock exchange soared to 38,400.

Now the big question on everyone’s mind is that will Nifty reach the heights where Sensex was in 2018 at 38,400? Will the Nifty touch those record highs in 2028?

Rajesh Palviya from Axis Securities highlights the fact that Indian markets have been growing at a robust 15-16 percent compounded rate during the current bull run and historically, Nifty tends to be around 3.5 times lower than Sensex. A 15 percent annual growth rate typically triples investments over a decade, he adds.

He further highlighted similar growth patterns for Nifty, projecting it could potentially reach 38,000 by 2028, a level seen by Sensex in 2018. He attributes this optimism to strong earnings forecasts, ongoing government investments, and solid GDP growth expectations.

In a similar context, Kranthi Bathini, Director of Equity Strategy at WealthMills Securities, believes that the historical trend could repeat given the current stock market scenario and growth potential. He sees India shifting from a service-oriented to a manufacturing-driven economy, expecting this trend to boost employment and per capita income, making the markets vibrant. He predicts the coalition government will prioritise growth without compromise.

Incidentally, the profit-to-GDP ratio for the Nifty 500 universe and listed India Inc reached 4.8% and 5.2%, respectively in 2024, marking a 15-year peak. The year-on-year growth was driven primarily by the BFSI, oil & gas, and automobile sectors, accounting for 95% of the overall increase.
On the other hand, metals, technology, and chemicals sectors had a negative impact on the ratio.

The Nifty 500 saw a 0.8 percent improvement in its profit-to-GDP ratio compared to the previous year, with contributions from BFSI (up 0.3%), oil & gas (up 0.3%), and automobile (up 0.2%) sectors.

Looking at the Nifty 50, domestic brokerage major Motilal Oswal Financial Services anticipates around 13 percent year-on-year profit growth for FY25, driven mainly by BFSI, oil & gas, metals, and technology sectors, which are expected to contribute 75 percent of Nifty 50's incremental earnings.

Meanwhile, in a recent interaction with CNBC TV18, Ridham Desai of Morgan Stanley maintained a bullish outlook on India's growth prospects, likening the current economic juncture to a pivotal moment. Despite the transition to a coalition government, with Prime Minister Modi still leading, Desai's optimism about India's future remained steadfast.

Desai is not alone in sporting extreme optimism and a bullish outlook.
Jefferies recently projected that India's stock market value could more than double to $10 trillion by 2030, citing its historical delivery of double-digit returns and ongoing economic reforms.

With one of the world's fastest rates of economic growth, India has become an appealing market for global investors, particularly those diversifying away from China, it said while adding that over the past decade, India's GDP has grown at a 7 percent compounded annual growth rate (CAGR), reaching $3.6 trillion, elevating it from the eighth-largest to the fifth-largest economy globally.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.