International Journal of Research in Finance and Management 2025; 8(1): 550-553

P
P-ISSN: 2617-5754
E-ISSN: 2617-5762
IJRFM 2025; 8(1): 550-553 A study on performance and growth of Nifty 50 in
[Link]
Received: 04-03-2025 India
Accepted: 05-04-2025

Badal Patel Badal Patel and Kumarjay Shakya

Professor, Student, SEMCOM,
Vallabh Vidyanagar, Anand, DOI: [Link]
Gujarat, India

Kumarjay Shakya Abstract

Assistant Professor, SEMCOM, This study investigates the volatility and return characteristics of the Nifty 50 Index over the five-year
Vallabh Vidyanagar, The period from April 01, 2019 to March 31, 2024. It also studies the market pre-COVID and post-COVID
CVM University, Anand, using the daily high and low prices of the two years from 2019-2021. The main objective is to study the
Gujarat, India performance and growth of Nifty 50 over the last five years in India. Utilizing daily closing prices
sourced from NSE website we calculate the average daily return, standard deviation of daily returns
and their annualized equivalents to provide a comprehensive analysis of the index's performance and
risk profile. The findings reveal an average daily return of 0.053% indicating a steady growth in the
index while the standard deviation of daily returns at 1.21% reflects the short-term volatility
experienced by investors. When annualized, the average return of 14.26% and median return of 11.82%
underscores strong market performance suggesting healthy growth in the Indian stock market over the
analysed period. The annualized standard deviation of 19.03% highlights the associated risk reflecting
significant deviation from the annual returns. This study provides valuable insights for investors,
portfolio managers, and policymakers seeking to understand the dynamics, risk and return of the Nifty
50 Index.

Keyword: Nifty 50, Volatility, NSE, performance and growth of stock market, Nifty 50 and COVID-
19

Introduction
Nifty 50
The Nifty 50 is a diversified 50 stock index accounting for 15 sectors of the economy. The
Nifty 50 index was launched on 22 April 1996 with a base date of 3 November 1995 and
with 1000 as its base value and a base capital of Rs.2.06 trillion. It is used for a variety of
purposes such as benchmarking fund portfolios, index-based derivatives and index funds.
Nifty 50 is owned and managed by NSE Indices Limited (formerly known as India Index
Services & Products Limited) (NSE Indices). NSE Indices is India's specialised company
focused upon the index as a core product.
 The Nifty 50 Index represents about 54% of the free float market capitalization of the
stocks listed on NSE as on September 30, 2024.
 The total traded value of Nifty 50 index constituents for the last six months ending
September 2024 is approximately 27% of the traded value of all stocks on the NSE.
 Nifty 50 is ideal for derivatives trading.

Performance Indicator
The Nifty 50 is a benchmark that helps investors and market participants evaluate the
performance of the Indian stock market and track the performance of the top 50 companies
in the country. These enterprises are picked based on their liquidity and market
capitalization. They span sectors like finances, energy, consumer goods, health care, etc.

Correspondence Author:
Review of Literature
Badal Patel Various studies have been done in the past to predict the relationship between stock market
Professor, Student, SEMCOM, movement and macroeconomic variables. But in the changing scenario, whether there is a
Vallabh Vidyanagar, Anand, relationship between stock market and macroeconomic variables exist or not should be
Gujarat, India tested.

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 Chen et al. (1986) [11] found that equity returns in May 2024. Using Yahoo Finance data, he analyzed
developed countries are significantly influenced by daily and annualized returns and standard deviations to
macroeconomic variables, including industrial provide insights into the index’s performance and risk
production growth, risk premium changes, yield curve profile.
twists, and inflation-related factors.
 Ravi (2020) [12] analysed the Indian stock market before Research Methodology
and during COVID-19, highlighting that in early A) Research Problem
January, the NSE and BSE were at record highs of This study will address the performance and growth of Nifty
12,362 and 42,273, respectively. However, the outbreak 50 in India in last 5 years from 2019-20 to 2023-24. It will
caused a sharp decline, with BSE Sensex and NSE also address the sectoral contribution in Nifty 50.
Nifty falling by 38%, leading to a 27.31% market loss.
The hospitality, tourism, and entertainment sectors B) Objectives of the study
suffered over a 40% drop due to transport restrictions. To study the performance and growth of Nifty 50 Index in
 Bhargavkumar R Paghadal (2018) [13] examined the India.
performance of Nifty 50 and Nifty Next 50. His study
concluded that Nifty 50 is less volatile and risky but has C) Data Collection
a negative alpha, while Nifty Next 50 is more volatile For the present study secondary data is used by the
yet outperforms the benchmark. researcher from Nifty 50, NSE and other published reports
 Investors willing to take calculated risks can achieve from 2019-20 to 2023-24 such as historical data report,
higher returns with Nifty Next 50. Over the long term, sectoral composition report, volatility assessment (Daily
both indices can beat inflation and generate positive Returns and Standard Deviation) and others.
returns.
 Raval and Mehta (2020) [14], as referenced by Dr. D) Limitations of the study
Bhuvaneshwari D, found a strong positive correlation  Access to detailed data or internal reports might be
between Nifty 50 and the financial services and restricted, limiting the scope of analysis.
pharmaceutical sectors from 2008 to 2018. Similarly,  There is lack of research time resulting in erroneous
Singh and Kumar (2020) [15] reported that the financial report.
services sector outperformed other major indices in  There can be biasness due to the secondary data
India. collection.
 Hari Prasad Rao et al. (2024) [16] assessed the Nifty 50  There is no scope for interaction to the authorized
and nine sectoral indices over ten years, revealing that person.
the sectoral average return outperformed Nifty 50 in six
of those years. Analysis and Interpretation
 Ram Prasath M (2024) [8] studied the volatility and 1. Volatility and Risk Assessment
return characteristics of Nifty 50 from May 2019 to

Graph 1: Showing Daily Return,%

Data Analysis  Annualize the average daily return and standard

 Calculate daily returns. deviation to provide a clearer perspective.
 Find the average daily return and standard deviation of  Utilize Excel for data manipulation and calculations.
returns for the entire five-year period.

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1. Average Daily Return Value: 0.1426 (or 14.26%)

Formula: Return = LN (Ending Price/Beginning Price), also
known as “Log Returns”. Then, Average Daily Return = The annualized average return of 14.26% indicates that if
Sum of Daily Log Returns/1234. the daily returns are compounded over a year, the NSE
index has gained approximately 14.26% per annum over the
Where 1234 is number of trading days from 1st April 2019 past five years. This is a relatively a good return suggesting
to 31st March 2024. strong growth in the index during this period.

Value: 0.00053792914 (or 0.053%) 4. Annualized Standard Deviation (Volatility)

Formula: Standard Deviation of Daily Return *SQRT(N)
On an average, the NSE index has grown by about 0.05% where N: Time Period
per trading day over the past five years (2019-20 to 2023- Value: 0.19031708 (or 19.03%)
24). While this may seem like a small daily increase, it is
quite normal for stock indices which grows steadily over a The annualized standard deviation of 19.03% reflects the
long period of time. annualized volatility of Nifty
50. This means that the annual returns typically fluctuate by
2. Standard Deviation of Daily Return (Volatility) ±19.03% from the average annual return. Higher volatility
Formula: Formula of STDEV in Excel. implies higher risk but it also indicates the potential for
Value: 0.0121 (or 1.21%) higher returns.

The standard deviation measures how much the NSE Nifty 5. Annualized Median Return
50 index’s daily returns fluctuate. A 1.21% standard Formula: Formula of MEDIAN in Excel.
deviation means that on most days, returns move within Value: 0.118244627 (or 11.82%)
±1.21% of the average. This gives an idea of the index’s
short-term volatility and risk. This annualized median return of 11.82% reflects that an
average investor would have earned the return of 11.82%
3. Annualized Average Return annually over the period from 2019-20 to 2023-24
Formula: (1+DR)^N-1*100, where DR: Daily Return
N: Time Period 2. Nifty-50 Pre COVID and Post COVID

Graph 2: Showing Nifty 50 Pre-COVID and Post-COVID

PRE COVID at their highest levels ever, hitting peaks of 12389.05 and
The COVID-19 pandemic had a catastrophic effect on the 42,273 respectively. At the beginning of the year, there were
global stock market, and India was no exception. Pre close to 30 companies that were expected to file IPO’s. The
COVID-19, market capitalization on each major exchange market conditions were generally favourable as they
in India was about $2.16 trillion. In the start of 2020, there witnessed record highs in mid-January.
was overall recovery which led to both NSE and BSE traded

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Post COVID & Nifty Next 50. 2018;5(7):1036-1040.

The Impact of novel corona virus (COVID-19) on the stock 4. Nifty 50 ETF. Performance evaluation of Nifty 50
market is one such event which has all characteristics of a index ETF’s and Nifty 50 index mutual funds:
black swan (refers to an unexpected event). The stock empirical evidence from India. 2024;11(2):705-717.
market across the world came crashing down with the rise 5. Nifty 50. Performance of sectoral indices and their
of Covid-19. It has brought the entire world to a halt relationship with Nifty 50. 2024;9(7):350-356.
including the world of business. The markets around the 6. Historical data. [N.D.]. Available from:
world have come crashing down to a level last seen during [Link]
the financial crisis of 2008. Although the world has seen a data
market crash before, the impact due to COVID-19 is 7. Money control. Indian indices. [N.D.]. Available from:
unusually different as the pandemic is widely spreading due [Link]
to which there is a lot of uncertainty in the market. The 8. Prasath RM. Evaluating market volatility: a
country went into a complete lockdown for almost a period comprehensive study of the Nifty 50 index from May
of 3 months which has taken a toll on various economic 2019 to May 2024. 2024;6(3).
activities. 9. Praveen Kumar M, Manoj Kumara NV. Market
Nifty 50 plunged down 35% from index price of 12389.1 capitalization: pre and post COVID-19 analysis.
high (16-Jan-2020) to 7511.1 low (24-Mar-2020). On March Materials Today: Proceedings. 2021;37:2553-2557.
23, 2020, the Sensex and Nifty experienced one of their Available from:
most significant falls dropping by over 13% and wiping out [Link]
INR 13.95 lakh crore from investors' pockets from 8745.45 10. Vinitha R, Babu S. Pre and post COVID-19 impact on
closing price (20-Mar-2020) to 7583.6 low (23-March- Indian stock market with special reference to NSE-
2020) due to the announcement of lockdown. The fallout Nifty 50, 2023, p. 3479-3485.
was so severe that during the early trades itself, the trading 11. Chen, et al. Macroeconomic variables and equity
halted 45 minutes after the Sensex hit the 10% lower circuit. returns in developed countries, 1986.
This happened twice in ten days. 12. Ravi. Analysis of the Indian stock market before and
As the country started easing the lockdown and restarted the during COVID-19. 2020;12:2362-42,273.
economic operations in the due end of May stock indexes 13. Bhargavkumar RP. Performance of Nifty 50 and Nifty
started picking its speed up on the way to recovery as it can Next 50, 2018.
be seen in the June 2020 and the following year data. The 14. Raval R, Mehta. Correlation between Nifty 50 and
graph went all the way up to a new peak ever at 15431.75 financial services and pharmaceutical sectors. 2020. In:
on 16th February 2021 for the financial year 2020-21. This Bhuvaneshwari D, editor.
implies that every dip during the rally in the Nifty 50 had 15. Singh A, Kumar. Financial services sector performance
been bought by investors which led to a run-up of 105.45% compared to major indices in India, 2020.
from 7511.1 low (24th March 2020) to 15431.75 high (16 th 16. Hari Prasad Rao et al. Assessment of Nifty 50 and
February 2021). sectoral indices over ten years, 2024.

Findings and Conclusion

From this study on “Performance and Growth of Nifty 50 in
India”, we can conclude that Nifty-50 has significantly
grown both in its performance and value over the last five
years from 2019-20 to 2023-24 despite the unexpected
events like COVID-19 and Russia-Ukraine war. It has given
an annualized average return of 14.26% which implies that
on an average all the investors have earned the return of
14.26% on their investments and annualized median return
of 11.82% implies that most of the investors have gained a
return of 11.82% on their investments.
We can also conclude that despite of the COVID-19 crash
which wiped out INR 13.95 lakh crore from investors'
pockets with the drop of over 13% on March 23, 2020, NSE
is standing tall at 5th position among the global stock
markets with market capitalization of ₹438.9 lakh crore
(US$ 5.1 trillion), (December 2024).

References
1. Bhuvaneshwari D. An analytical study of Nifty 50 and
financial sector indices. [N.D.].
2. NSE India. Nifty 50 live: NSE Nifty 50 index today.
[N.D.]. Available from:
[Link]
nifty50-index
3. NSE India. Performance analysis of the index: Nifty 50

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