The Nifty closing above the 10,000-mark for the first time ever made many market participants nostalgic about the old times when the Nifty made its debut in the Indian markets way back in 1995. A look at the composition of the Nifty in 1995 will help us understand the manner in which the Indian economy has undergone a transformation in the last two decades.

Index composition in 1995 A comparison of the Nifty constituents by full market capitalisation shows that Reliance Industries continues to rule the roost, despite the passage of over two decades. The market cap of this behemoth has increased from ₹10,000 crore to over ₹5 lakh crore in this period, as the company went on to merge other group companies within itself to emerge as a conglomerate with presence in not just oil, textiles and petrochemicals but retail and telecom as well.

But the similarity between the Nifty at inception, and now, ends there. Consumer goods companies dominated the Nifty in 1995 with Hindustan Unilever, a heavyweight in the index then. ITC, Colgate-Palmolive, Brooke-Bond Lipton and Ponds were other consumer companies that were part of the Nifty as they were the preferred stocks of the trading community then. The MNC tag was an added attraction for some of these companies.

Maruti yet to roar Maruti Suzuki was yet to make a mark in India or among investors in stock markets in the Nineties. But stocks of companies such as Tata Motors, which were taking shaky steps into manufacturing passenger cars, TVS Suzuki, Ashok Leyland and Hero MotoCorp (then Hero Honda) were able representatives of the auto sector in the index.

Financial services’ stocks which dominate the Nifty now, were pretty significant 22 years ago too.

But with private banks yet to grow large enough, PSU banks and development financial institutions such as SBI, IDBI Bank, IFCI, Oriental Bank of Commerce and the erstwhile ICICI Ltd were included in the index. Bajaj Holding and Investments held the flag for NBFCs.

Mirror of market growth Information technology companies had not grown enough to find a place in the Nifty when it was formed.

So, the stock of TCS and Infosys that currently hold the pride of place in the Nifty were conspicuous by their absence then.

The 10-fold increase in the index in a little over 21 years has been at a compounded annual growth rate of close to 11.5 per cent. It is, therefore, not surprising that Indian investors are a cheerful bunch now, given that the Nifty represents 54 per cent of the Indian market currently.

Numbers released by the NSE also show that of the 22 years since inception, the Nifty has delivered positive returns in 14 years. The worst loss suffered by the index was in 2008 when it closed with 51.8 per cent loss.

The highest calendar year gain was in 2009 when the index closed 75.8 per cent higher when it reversed from the drubbing it received in the market crash following the sub-prime crisis in the US. Another strong year was 2003, when the index gained 71.9 per cent, again as it recovered from the dot-com bust.

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