The sum behind every index move
The Nifty 50 index level is, by definition, the P/E multiplied by earnings. When the index rises, one or both of those rose. That sounds obvious, but the split matters: earnings growth is something companies earned, and a rise in the P/E is investors agreeing to pay more for the same earnings.
We can see both. NSE publishes the Nifty 50's closing level and its P/E every day. Dividing the first by the second gives the earnings the P/E implies. This post does that at each year-end.
One break in the series
On 31 March 2021 NSE changed the earnings behind the ratio, from standalone company earnings to consolidated ones, which include subsidiaries. The published P/E fell from 40.43 to 33.20 overnight while the index barely moved (see the Nifty 50 P/E post). So the series is two series, and this post does not chain them: 2013 to 2020 on the old basis, 2022 to 2026 on the new one.
2013 to 2020: price rose 2.4 times, earnings 15%
| Year | Index change | Implied earnings | P/E change | P/E at year-end |
|---|---|---|---|---|
| 2013 | +6.8% | +6.6% | +0.1% | 18.7 |
| 2014 | +31.4% | +16.1% | +13.2% | 21.2 |
| 2015 | −4.1% | −5.5% | +1.6% | 21.5 |
| 2016 | +3.0% | +0.9% | +2.0% | 21.9 |
| 2017 | +28.6% | +4.8% | +22.8% | 26.9 |
| 2018 | +3.2% | +6.1% | −2.8% | 26.2 |
| 2019 | +12.0% | +3.6% | +8.1% | 28.3 |
| 2020 | +14.9% | −15.4% | +35.9% | 38.5 |
From the end of 2012 to the end of 2020 the index rose from 5,905 to 13,982, up 137%. Implied earnings rose from about 316 to 364, up only 15% in eight years. The P/E went from 18.7 to 38.5, a rise of 106%.
On this basis, almost all of the gain in that period came from the P/E. In 2017 a 28.6% rise in the index came with earnings up 4.8% and the P/E up 22.8%. In 2020, earnings fell 15.4% and the index still rose 14.9%, because the P/E climbed 35.9%.
2022 to 2026: earnings did the work
| Year | Index change | Implied earnings | P/E change | P/E at year-end |
|---|---|---|---|---|
| 2022 | +4.3% | +15.4% | −9.6% | 21.8 |
| 2023 | +20.0% | +12.9% | +6.3% | 23.2 |
| 2024 | +8.8% | +15.7% | −6.0% | 21.8 |
| 2025 | +10.5% | +5.8% | +4.4% | 22.8 |
| 2026 (to 13 Oct) | −13.0% | +1.9% | −14.7% | 19.41 |
On the consolidated basis, from the end of 2021 to 13 October 2026 the picture reverses. Implied earnings rose from about 720 to 1,171, up 62.6%. The P/E went from 24.1 to 19.41, down 19.5%. The index rose from 17,354 to 22,722, a gain of 30.9%.
In 2022 and 2024, earnings grew by 15% or more while the index rose 4.3% and 8.8%, because the P/E gave back part of the gain each time.
What 2026 shows
The P/E is the whole story of this year's fall. Earnings are 1.9% higher than at the end of 2025, and the P/E has dropped from about 22.8 to 19.41. That is a re-rating, the market paying less per unit of profit, and not a profit decline.
It also puts today's level in context. On the current consolidated basis, 19.41 is below every year-end since 2021, which ran from 21.8 to 24.1. Against the ratio's published record since 1999, which runs from 10.68 to 42, it is nowhere near either end.
How to use this
A split like this tells you what has driven past returns, not what will drive future ones. The implied earnings are arithmetic from a published ratio, not a company-by-company profit figure, and 2021 cannot be bridged. The index is price only, without dividends. Nothing here is advice to buy or sell.
Frequently asked questions
How is the Nifty 50's index level linked to earnings and P/E?
The index level equals the P/E ratio multiplied by earnings per index unit. Dividing the closing level by NSE's published P/E gives the earnings figure the P/E implies. A rise in the index therefore comes from earnings growth, a higher P/E, or both.
Why is 2026 down when earnings are still growing?
To 13 October 2026 the implied earnings are up 1.9% since the end of 2025, but the P/E has fallen 14.7%, from about 22.8 to 19.41. The index is down 13.0% because the fall in P/E outweighs the earnings growth.
Can the P/E series be compared across 2021?
Not directly. NSE changed the earnings behind the Nifty 50 P/E from standalone to consolidated on 31 March 2021, which is why the implied earnings figure roughly doubles between the end of 2020 and the end of 2021. This post therefore treats 2013 to 2020 and 2022 to 2026 separately.
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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