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Charts & Analysis

Chart Of The Day: Bonds Vs Stocks in India

Much has been made of the US 30 yr bonds now returning more than stocks. India is new in terms of data, and I acquired 20+ year bond index data from CCIL (only since 2004) and I plotted the five year returns, since November 2006, of the Total Returns Index in both cases. You need to take total returns – which includes interest paid for bonds and dividends for stocks.

20 yr bonds vs Nifty

Bonds can outperform stocks and as recently as September, the bond return came close to stocks. Remember this is when the 20yr+ bond index had a yield of 8.05% in Nov 2006, and is now at 9.06% (a rising yield means dropping prices, which means the principal component of your return is lesser today).

As a comparison, over the last five years, as of Nov 3, 2011:

Nifty Annualized Return: 8.33%
20+ yr bond Annualized Return: 6.38%

Also read: Cherry picking 30 year bond data?

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  • sandeep says:

    hello Deepak.Bonds always give lesser returns than equities,though they are more stable.Charts also prove that.Anything more you have derived.?I just don’t know.Please tell me.(@sandeepgeetla)