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Charts & Analysis

Chart Of The Day: Nifty’s Real Return Adjusted For Inflation

You might wonder how much damage inflation has inflicted on your returns. Let’s take the Nifty, and adjust it for inflation (Monthly WPI) since 2000. Let’s also use the “Total Returns Index” which is the Nifty return including dividends reinvested:

Nifty Adjusted For Inflation

  • The real return, not including dividends, of the Nifty is nearly half that of the actual Nifty since 2000.
  • It’s not always useful to use the “with dividends” bit, since the only really tradable way to get into the Nifty is either through futures (does not offer dividends) or index funds (have a management fee).
  • The real return (with or without dividends) is at a two year low, while the index is at an 18 month low. Inflation’s eaten the rest.
  • A 11.5 year return of 123% From Jan 2000 implies a compounded annual growth rate of 7.22%, post inflation.