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How did the Indian stock market perform in 2022?

Posted on 22 Jan 2023
Author: Sayan Sircar

Tags: Market Movements

3 mins read
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This article shows the report card for the Indian stock market for 2022 vs the last 25 years.

How did the Indian stock market perform in 2022?

📚 Topics covered:

Indian stock market has overall made money
Looking back at 2022
25y report card of SENSEX and Nifty 50
Monthly returns over the last 25 years
Takeaways for investors

Indian stock market has overall made money

Year-wise SENSEX return distribution since 1997

But there has been a lot of fluctuation over the years.

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Looking back at 2022

25y-report card of SENSEX: 2022 is the 9th worst year

2022 was a rare year in which stock markets overall fell in India. If we look at the last 25 years, since 1998, the Sensex and Nifty 50 have given negative returns only 6 times. 2022 returns were the 3rd lowest but positive return in these 25 years.

This article uses the SENSEX Total Returns Index and the Nifty 50 price index to show a report card for the Indian stock markets.

25y report card of SENSEX and Nifty 50

25-year report card of Sensex and Nifty 50 until 2022

Note: The Nifty 50 has not regularly underperformed the SENSEX. The Nifty 50 data in the chart uses the price returns, while the SENSEX data includes price returns and reinvested dividends.

Monthly returns over the last 25 years

Monthly returns of SENSEX over the last 25 years ending 2022

The average return of the SENSEX with reinvested dividends is 18% over these 25 years. So ₹1 lakh invested in the beginning would have become ₹25 lakhs today. But that journey was not smooth, with a 52% drop in 2008 due to the global financial crisis and more minor falls along the way.

Takeaways for investors

Investors should be prepared for both rises and falls along the way when investing in equity. This concept is called the sequence of returns. The unpredictability of this sequence causes sequence of return risk that we have discussed here: How does sequence of return risk affect your goals?.

In the Indian equity market, there is limited evidence of flat stock market returns over long periods, like a decade. Hence, investors, especially new ones, will face a test of conviction in equity investing if such a situation arises.

In the Arthgyaan goal-based investing framework, we assume a positive premium over inflation for equity and zero real returns for an investor’s lifetime retirement portfolio: How much returns should you expect from your retirement portfolio?.

Investors must create their investment plan without worrying about such fluctuations in the equity markets since they would be safe by implementing risk management by reducing their allocation to equity as their goal comes closer: Your portfolio needs a glide path: what, why and how?.

We have evidence here that goal-based investing works for long-term goals in India: Goal-based investing: does it work in India? which you can implement for yourself using the Arthgyaan goal-based investing tool.

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Topics you will like:

Asset Allocation (20) Basics (8) Behaviour (10) Budgeting (11) Calculator (17) Case Study (6) Children (14) Choosing Investments (40) FAQ (7) FIRE (13) Gold (14) Health Insurance (4) House Purchase (21) Insurance (15) International Investing (10) Life Stages (2) Loans (13) Market Movements (17) Mutual Funds (34) NPS (6) NRI (15) News (10) Pension (8) Portfolio Construction (47) Portfolio Review (27) Reader Questions (6) Real Estate (6) Retirement (38) Review (13) Risk (6) Safe Withdrawal Rate (5) Set Goals (27) Step by step (15) Tax (43)

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