NIFTY’s Journey from October 2021 to Now: A Tale of Two Perspectives

The Indian stock market has been on quite a ride since October 2021, and the NIFTY 50 index tells an intriguing story depending on how you look at it. From October 2021 to today, February 27, 2025, the NIFTY has climbed from 18,604 to 22,547—an impressive 21% gain in rupee terms. But for global investors tracking it in U.S. dollars, the picture shifts: a modest 4.5% rise from $247.50 to $258.90. So, what’s driving this divergence, and what does it mean for investors? Let’s unpack it.

The Rupee Story: A Solid 21% Climb

In local currency terms, the NIFTY’s 21% growth over this period reflects a robust performance. India’s economy has been a bright spot amid global uncertainty, with strong corporate earnings, a growing consumer base, and government initiatives in infrastructure and digitization fueling optimism. Sectors like technology, financials, and consumer goods have been standout performers, pushing the index higher despite occasional volatility.

This 21% jump isn’t just a number—it’s a testament to India’s resilience. Global headwinds like inflation, rising interest rates, and geopolitical tensions have tested markets worldwide, yet the NIFTY has managed to power through. For domestic investors, this growth has likely been a rewarding ride, especially for those who stayed the course through the ups and downs.

The Dollar Lens: A Tamer 4.5% Gain

Now, flip the perspective to U.S. dollars, and the story changes. The NIFTY’s value in dollar terms rose from $247.50 to $258.90—a far less dramatic 4.5% increase. What’s behind this gap? The answer lies in the rupee’s depreciation against the dollar. Over this period, the Indian currency has weakened, eroding some of the index’s gains when converted to dollars. For international investors, this currency effect has muted the NIFTY’s otherwise strong performance.

This isn’t unique to India—emerging markets often face this dynamic when their currencies soften against the greenback. Still, a 4.5% gain isn’t negligible. It’s a reminder that even with currency fluctuations, India’s market has held its own compared to global peers, many of which have struggled to post positive returns in the same timeframe.

Looking ahead, the NIFTY’s trajectory will hinge on a few key factors. Domestically, continued economic growth, corporate profitability, and policy stability will be critical. Globally, the rupee-dollar exchange rate, U.S. Federal Reserve actions, and commodity prices (especially oil) will play a big role in shaping returns—particularly for dollar-based investors.

For Indian investors, the 21% run suggests there’s still momentum in the tank, though valuations in some sectors are starting to look stretched. For those abroad, the 4.5% dollar return might underwhelm, but it’s worth noting that India remains a long-term growth story—one that could shine brighter if the rupee stabilizes or strengthens

Disclaimer: 

"The information in this article is provided for educational purposes only and does not constitute financial advice. It reflects market data and analysis as of February 27, 2025. Investing in the stock market involves risks, and past performance is not indicative of future results.