The arithmetic
An index level is the product of two things: what the index's companies earn, per unit of the index, and the multiple investors pay for that. NSE publishes the Nifty 50's closing level and its P/E. Divide one by the other and you get the implied earnings behind the index, in index points. The change in the index is then the earnings change and the P/E change multiplied together.
This is useful when an index falls, because it shows whether the market is paying less for the same profits or the profits themselves have shrunk.
The five years
| Year-end | Index | P/E | Implied earnings | Earnings change | P/E change | Index change |
|---|---|---|---|---|---|---|
| 2021 | 17,354 | 24.11 | 719.8 | – | – | – |
| 2022 | 18,105 | 21.79 | 830.9 | +15.4% | -9.6% | +4.3% |
| 2023 | 21,731 | 23.17 | 937.9 | +12.9% | +6.3% | +20.0% |
| 2024 | 23,645 | 21.79 | 1,085.1 | +15.7% | -6.0% | +8.8% |
| 2025 | 26,130 | 22.75 | 1,148.6 | +5.8% | +4.4% | +10.5% |
| 2026 (22 Oct) | 22,688 | 19.13 | 1,186.0 | +3.3% | -15.9% | -13.2% |
The last three columns are the changes over the year. In 2026 the bottom row shows something none of the earlier years did: earnings rose and the index fell by a wide margin. Multiplying through, 1.033 × 0.841 = 0.869, a 13.2% fall.
What the table shows
Earnings have grown every year, but more slowly lately. Implied earnings rose 15.4%, 12.9% and 15.7% in 2022, 2023 and 2024, then 5.8% in 2025 and 3.3% so far in 2026. Taken from the end of 2021 to 22 October 2026, they are up 64.8% (719.8 to 1,186.0).
The multiple did the swinging. The P/E went 24.11, 21.79, 23.17, 21.79, 22.75 and now 19.13. Over the five years the index rose 30.7% (17,354 to 22,688) while earnings rose 64.8%, which means the P/E absorbed the difference, falling 20.7% from 24.11 to 19.13.
2023 and 2025 were years where both helped. In 2023 a 12.9% earnings rise combined with a 6.3% higher P/E to give a 20.0% gain, and in 2025 a 5.8% rise combined with a 4.4% higher P/E for a 10.5% gain. In 2026 the multiple has fallen as it did in 2022 and 2024, but this time the earnings rise is the smallest of the five years.
Comparing 2026 with the earlier fall years
The index fell in only one of the five years, so there is no direct precedent in this table. The closest is 2022, when the P/E fell 9.6% and the index still rose 4.3% because earnings grew 15.4%. In 2026 the P/E has fallen by more (15.9%) and earnings have grown by much less (3.3%), so nothing offsets it.
Our price-to-book post shows the same move from another angle: the Nifty 50 at 2.84 times book, the lowest since June 2020. And for the index's year in context, the year-to-date comparison since 2013 shows how rare a fall of this size is by this point in the year.
Limits of the method
- It is trailing. NSE's P/E is based on reported earnings, so implied earnings describe the past four quarters, not what is expected.
- It is an index calculation. Companies enter and leave the Nifty 50, and the share of each changes; the implied-earnings figure moves with those changes as well as with profits.
- The 2021 break. Before 2021 the same calculation gives a series that cannot be compared with the later one, so earlier years are left out.
- P/E is not a price signal. A lower multiple says what the market pays today. It does not say what it will pay next.
For where the P/E stands in its own history, see the Nifty 50 P/E post for October. This post is arithmetic on published index figures and offers no forecast.
Frequently asked questions
How do you split an index move into earnings and P/E?
An index level equals earnings per index unit times the P/E. NSE publishes the level and the P/E, so dividing one by the other gives implied earnings. The change in the index is then (1 + earnings change) × (1 + P/E change) − 1.
Why did the Nifty 50 fall in 2026 if earnings rose?
On NSE's figures the index's implied earnings rose 3.3% from the end of 2025 to 22 October 2026 (1,148.6 to 1,186.0) while the P/E fell 15.9%, from 22.75 to 19.13. That combination is a 13.2% fall in the index.
Why does the comparison start in 2021?
Implied earnings nearly doubled between 2020 and 2021 (363.6 to 719.8), which looks like a change in how the published P/E is calculated rather than a doubling of profits. We do not compare across that break, so the table runs from the end of 2021.
This is commentary on published data, not investment advice. WealthTicker is not a SEBI-registered adviser or distributor. Figures are WealthTicker’s own calculations from public data — AMFI’s fund NAVs and disclosures, NSE’s index and FII/DII files, and the fund houses’ monthly portfolios (how we calculate). They are as of the dates stated and can be revised by their source.
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