The method
A price index moves with two things: the earnings of its companies and the multiple the market pays for them. NSE publishes a P/E for each index every day, so dividing the closing level by the P/E gives an implied earnings figure, and the change in it over five years is the earnings growth. What is left over is the change in the multiple.
We compared the close on 16 October 2026 with the last close on or before 16 October 2021, which was 14 October 2021. Returns are price returns, so dividends are not included, and "earnings" means the implied figure, which also reflects changes in the index's membership. Our earnings vs valuation post uses the same arithmetic over a longer span.
Sixteen indices, five years
| Index | 3-year return (a year) | 5-year return (a year) | P/E Oct 2021 | P/E now | Implied earnings growth (a year) |
|---|---|---|---|---|---|
| Nifty PSU Bank | 16.8% | 24.4% | 12.59 | 7.25 | 38.9% |
| Nifty Microcap 250 | 15.7% | 19.1% | 42.61 | 26.47 | 31.0% |
| Nifty Auto | 16.0% | 16.9% | 64.94 | 29.95 | 36.5% |
| Nifty Metal | 20.8% | 15.1% | 9.45 | 15.91 | 3.7% |
| Nifty Midcap 150 | 12.7% | 12.4% | 35.14 | 28.12 | 17.6% |
| Nifty Smallcap 250 | 12.3% | 12.2% | 30.55 | 33.68 | 10.0% |
| Nifty Pharma | 19.4% | 11.8% | 31.60 | 39.88 | 6.8% |
| Nifty Next 50 | 14.9% | 9.1% | 27.62 | 18.03 | 18.8% |
| Nifty Realty | 10.6% | 8.9% | 78.99 | 34.98 | 28.2% |
| Nifty Energy | 9.9% | 7.9% | 13.08 | 14.30 | 6.0% |
| Nifty Bank | 8.1% | 7.3% | 25.56 | 13.21 | 22.4% |
| Nifty 500 | 8.6% | 7.1% | 29.31 | 21.89 | 13.6% |
| Nifty Financial Services | 8.6% | 6.0% | 26.48 | 15.57 | 17.9% |
| Nifty 50 | 5.5% | 4.8% | 28.02 | 19.77 | 12.3% |
| Nifty FMCG | −5.2% | 1.5% | 45.11 | 30.84 | 9.5% |
| Nifty IT | 0.2% | −2.2% | 37.02 | 19.75 | 10.9% |
Three patterns
Earnings grew almost everywhere; multiples fell almost everywhere. All sixteen indices show positive implied earnings growth, from 3.7% a year (metals) to 38.9% (PSU banks). Twelve have a lower P/E now than in October 2021.
The Nifty 50 lost most of its earnings growth to the multiple. Its implied earnings rose 78.9% over the five years, from about 654.5 to 1,170.8, while the P/E fell 29%. The index ended up only 26.2% higher, which is the 4.8% a year. The Nifty Bank shows it more sharply: implied earnings grew 22.4% a year, yet the P/E halved from 25.56 to 13.21 and the price rose 7.3% a year. The Nifty 50 P/E page tracks the multiple today.
The strongest returns came from sectors whose P/E fell but earnings soared. The PSU banks and autos both saw their multiples fall by more than 40%, yet the earnings underneath grew by more than 36% a year, which drove 24.4% and 16.9% a year in price. Metals, small caps, pharma and energy are the other pattern: their P/Es are higher than in 2021, so price grew faster than earnings.
IT and FMCG: earnings up, price flat or down
The Nifty IT's implied earnings grew 10.9% a year, but its P/E fell from 37.02 to 19.75 and its price fell 2.2% a year. The Nifty FMCG grew earnings 9.5% a year, with its P/E down from 45.11 to 30.84, for a 1.5% annual price gain. Both started the period with high multiples, 45.11 and 37.02. In the last week the Nifty IT rose 11.7%, a reminder that a five-year number says little about what a sector did lately. Our cheapest and dearest indices post shows where each index's P/E sits against its own history.
What the numbers do not tell you
The start date matters. In October 2021 the Nifty 50 stood at a P/E of 28 against 19.77 now, so any five-year return from it carries that start. A start in October 2023 gives 5.5% a year over three years, which is not very different.
Implied earnings are a ratio, not a filing. They move with NSE's method and with index changes. A tidy 38.9% for PSU banks should be read as a direction, not an exact growth rate.
Price returns omit dividends. The Nifty 50's dividend yield is 1.49% in the latest data, so the total return was higher than 4.8%.
None of this is a recommendation to buy or sell any index or fund.
Frequently asked questions
What has the Nifty 50 returned over five years?
The Nifty 50 closed at 18,338.55 on 14 October 2021 (the last close before 16 October 2021) and 23,146.15 on 16 October 2026: a rise of 26.2%, or 4.8% a year, excluding dividends. Over three years from 16 October 2023 it is 5.5% a year.
Why did the Nifty 50 return so little when earnings grew?
Dividing each close by NSE's published P/E gives an implied earnings figure that rose from about 654.5 to 1,170.8, 12.3% a year. The P/E fell from 28.02 to 19.77, a drop of 29%, which took most of the earnings growth away from the price.
Which indices have a higher P/E than five years ago?
Four of the 16 indices compared: Nifty Smallcap 250 (30.55 to 33.68), Nifty Pharma (31.60 to 39.88), Nifty Metal (9.45 to 15.91) and Nifty Energy (13.08 to 14.30). The other twelve have lower P/Es than in October 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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