India’s broadest stock index Nifty 500 outperforms most of world’s leading indices in 10 years; here’s what Pratik Oswal says

The Nifty 500, India's most comprehensive stock index, has shown remarkable performance over the past decade, outstripping global indices with the exception of the Nasdaq 100, as revealed by a study conducted by Motilal Oswal Asset Management Company. Data shared by the money manager showed Nifty 500 index delivered an annualised total return of 16% in the past 10 years till December 2023, second only to Nasdaq 100 which gained 21.5% annually during the same period.

In comparison, the S&P 500, MSCI Emerging Markets, and MSCI EAFE (Developed Markets ex-US) have demonstrated an annualised growth rates of 15.4%, 6.1%, and 7.9%, respectively, during the same period.

Speaking on the study, Pratik Oswal, Head of Passive Funds, Motilal Oswal Asset Management Company said, “Over the past decade, India has ascended from the 10th to the 5th position in the global economy. Projections from industry experts indicate a further climb in rankings by 2030. Investors keen on capitalising on India’s robust growth narrative may find value in considering an investment in a comprehensive passive fund.”

He further added that the Nifty 500 index stands out as an optimal choice, providing extensive exposure to Indian equities with over 90% market capitalisation coverage. Boasting a well-balanced representation across large-, mid-, and small-cap segments, this index demonstrates a robust diversification in both individual stocks and sectoral allocations. Notably, the Nifty 500 has demonstrated a tendency to outperform the Nifty 50 during bullish market phases, while also offering a degree of resilience against downturns, particularly in comparison to mid and small-caps.”

Energy and financials were best performing sectors over last 10 years (Dec 31 2013-2023). The study reveals that the energy, IT, and Financial were the best-performing sectors, over last 10 years as of Dec 2023. The energy topped the chart with annualized growth of 17.8%, followed by financial services and IT generating, 17.2% and 16.3%, respectively. While, during 2003-2013, FMCG (21.8%), Auto (20.1%), and financial services (18.5%), were the top 3 performing sectors; it is interesting to note that the major uptick in these sectors was seen during the 2008-2013 on account of recovery from the global financial crisis.

Oswal also added that the Motilal Oswal Nifty 500 Index Fund, has established a commendable track record spanning over four years, currently boasting a total assets under management (AUM) of Rs 674.61 crore as of January 31, 2024. Impressively, the fund maintains an exceptionally low tracking error of 0.04% (4 basis points), underscoring its commitment to closely aligning with the performance of the Nifty 500 index.”

Among large, mid and small caps, the Nifty Midcap 100 index noted highest total annualised returns of 20.3% followed by Nifty Smallcap 100 (17.3%) and Nifty 50 index (14.6%) during the 2013-2023. During 2003-2013, the Nifty 50, Nifty Midcap 100 and Nifty Smallcap 100 delivered annualised returns of somewhere between 14%-15%.