Nifty Shariah indices vs the Nifty 50 since 2013

The long run

NSE's Shariah indices keep only the companies in their parent universe that pass a Shariah-compliance screen, which looks at both what a company does and how its balance sheet is financed. Conventional banks and lenders, whose business is interest, do not pass. NSE's methodology documents set out the full rules; what follows is what the numbers show.

Price returns from NSE's closing values, without dividends. Our closing values for these indices start in February 2012. The Nifty Shariah 25 starts later, on 13 May 2014; from then to 6 October 2026 it rose 9.3% a year, against 9.8% for the Nifty 50 and 11.8% for the Nifty 500.

So the screen helped the broad index and hurt the narrow one. The Nifty500 Shariah finished half a point a year ahead of the Nifty 500; the Nifty50 Shariah finished 1.4 points a year behind the Nifty 50.

Year by year

• Seven wins in 13 years, for both. The Nifty50 Shariah beat the Nifty 50 in seven of the complete years from 2013 to 2025, though one of those, 2016, was by less than a hundredth of a point (3.02% against 3.01%). The Nifty500 Shariah beat the Nifty 500 in seven too.
• The difference is in the size. The Shariah 50's wins averaged 7.6 points and its losses 9.9. The Shariah 500's wins averaged 7.4 and its losses 6.4, which is why it ended ahead.
• The worst years were recent. The Shariah 50 trailed by 15.2 points in both 2022 and 2025, and is 4.8 points behind again in 2026.

The pattern behind it: IT against banks

In 9 of the 13 years the Nifty50 Shariah beat the Nifty 50 in exactly the years the Nifty IT index beat the Nifty Bank index. The yearly gaps have a correlation of 0.72.

With banks screened out, other sectors, IT among them, weigh more in a Shariah index. We do not hold the indices' constituent weights, so this is read from the returns, not from a holdings list. The four years that broke the pattern were 2016, 2017, 2018 and 2023.

Where they stand now

All three Shariah indices set their record closes on 27 September 2024. The Nifty50 Shariah is 30.2% below its record of 5,677.88, the Nifty500 Shariah 19.3% and the Nifty Shariah 25 20.9%. The Nifty 50 is 13.5% below its record and the Nifty 500 9.4% below its own. Over five years the Nifty50 Shariah is down 8.6% while the Nifty 50 is up 29.1%.

All three Shariah indices trade at a higher P/E and P/B than the Nifty 50 and Nifty 500, and yield more. The Nifty50 Shariah's P/E is 1.25 times the Nifty 50's; since April 2021 that ratio has had a median of 1.14, a low of 0.84 and a high of 1.32. Against its own history the Shariah 50 sits near the middle (lower on 579 of 1,362 sessions), while the Nifty 50 is near its floor (lower on 15).

What this does not tell you

Price returns understate the Shariah indices a little more. They yield more than their parents, and dividends are left out of every figure here.

The members change. The screen is re-run, and companies enter or leave as their business or their borrowing changes.

An index is not a fund. A fund tracking any of these has costs and a tracking gap that the index does not.

The numbers are not a verdict on the screen. Whether a screened index suits an investor is a question of that investor's own principles; the returns only show what the screen has done to the ride.

Where to go from here

The guide to index funds and ETFs covers how index investing works, and factor investing and smart beta explains rule-based indices more broadly. Our Nifty IT P/E post looks at the sector whose swings line up with these indices' best and worst years.