- Wealth PMS (50L+)
If you’re invested in the Nifty, you might think, that at 7,900 it’s way higher than the “highs” of 6300 in 2007. In reality, though, inflation has eaten through your returns, and how!
We measure the Nifty as adjusted for inflation – by adjusting what Rs. 10,000 could buy, using the CPI. The chart (red line) depicts the growth of Rs. 10,000 in constant purchasing power terms – that is, adjusted for the Consumer Price Index. We take the Nifty including Dividends reinvested, which is depicted in an
What this has meant is a “lost 8 years” for India. Even 2015 was a lost cause – with a 4% down year on the Nifty, and 6% inflation.
Note: We said in January 2015 that the Nifty was breaking through new highs, but wasn’t a high adjusted for inflation or for the P/E ratio. But hey, the P/E ratio has risen through the year, largely because Nifty company earnings have collapsed. More on that in another post!