Number Theory: Nifty50 @ 20,000 – A remarkable journey
Nifty came into existence on 22 April 1996, trading with the value of 3 November 1995 as base. It comprises stocks of 50 companies representative of the market
On Monday, the NSE Nifty 50 reached 20,000 points for the first time since its inception in 1995. To be sure, the index saw a minor drop minutes after it hit the historic number, closing the day at 19,996.35 points.
The index came into existence on 22 April 1996, trading with the value of 3 November 1995 as the base. It comprises the stocks of 50 companies which are considered representative of the market as a whole. While not representative of the economy, indices such as the Nifty are nevertheless representative of economic (and investor) sentiment.
Here’s a look at the index’s journey and major events that moved it.
1996: NIFTY 50 STARTS TRADING: The Nifty 50 index is launched on 22 April 1996, with the base date of the index as 3 November 1995, the start date of equity trading on NSE.
1997: ASIAN FINANCIAL CRISIS: Investors desert emerging Asian markets on the heels of the 1997 Asian Financial Crisis, sending the Nifty 50 tumbling 7.87%. A similar bloodbath is seen in the markets of Thailand, Indonesia, South Korea and the Philippines.
2000: MILLENNIUM BUDGET: The Union Budget presented on 29 February 2000 by Yashwant Sinha, popularly called the millennium budget has a host of tax policy changes and is instrumental in advancing the IT revolution in India. The markets, however, fall 3.59% on the day it is presented.
2006: RALLY ON GLOBAL CUES: After a strong fall in early 2006, Nifty 50 rebounded 6.31% on June 15 on the back of global cues. This recovery then continued nearly consistently throughout the year, finally settling around December.
2007: DOMESTIC UPTICK: On 27 September 2007, Nifty 50 crossed the 5,000-mark for the first time as markets saw a euphoric second half of 2007. Buoyed by a strong rupee and foreign institutional investors (FIIs) buying around $17 billion worth of equities in the first nine months of 2007, Indian indices were soaring.
2008: BLOODY FRIDAY: The worst day of the market ever in India and possibly the world is 24 October 2008, when almost all the major world markets crash in response to the unfolding of the global financial crisis. Nifty loses 12% and a whopping 16% by the end of the week. It is still the worst day in Indian financial markets.
2009: RETURN OF UPA: Not long after the worst day in Indian financial markets, the United Progressive Alliance’s second victory in the 2009 elections marks the best day ever in Nifty’s history. The index rises 17% on 18 May 2009, the first trading session after the results are declared. The week also marks one of Nifty’s best performances, with the index closing 15.44% up.
2009: SATYAM SCAM: Nifty falls 6.18% on 7 January 2009 when Ramalinga Raju, the then chairman of Satyam Computers, resigns, admitting to falsifying accounts – rocking markets.
2014: A CHANGE IN GOVERNMENT: The National Democratic Alliance comes to power on 16 May 2014, with a majority mandate. The markets fall 0.9% on the day, but gain smartly in the very next trading session. A massive rally of around 1,500pts followed in the second half of 2014. This meant that Nifty, which started the year at around 6,300pts, ended 2014 over 8,200pts.
2017: GST ROLLOUT: On July 1, Goods and Services Tax (GST) is rolled out in the country, transforming the country’s taxation system and replacing a complex web of central and state taxes. It led to a massive jump in markets, with Nifty 50 crossing the 10,000-mark for the first time ever on July 26.
2019: BJP RETURNS TO POWER: Exit polls of 2019 Lok Sabha elections show an overwhelming majority to Narendra Modi’s Bharatiya Janata Party (BJP), which sends Nifty 50 soaring 3.7% on May 20. A few days later, as the results of the election are announced on May 23, the index again gains 2.5%.
2020: COVID LOCKDOWN: Reports of the Covid-19 disease emerge at the start of 2020, but do not impact global markets till late February. Just before a nationwide lockdown is imposed, the Nifty 50 falls nearly 13% on 23 March 2020. In the months that follow, the markets see a bumper recovery. By the end of the August, the index is at 11,387.5.
2023: HINDENBURG REPORT: Nifty closes 1.11% lower on 25 January 2023, a day after Hindenberg, the American short-seller-research firm, releases a report accusing Adani Group of manipulating stock prices. Nifty, until then, was trading above 18,000 points but falls to 17,000, and takes four months to fully recover, although not all of this is attributable to the report.
