The Nifty Total Market Index has emerged as one of the benchmarks in the stock market. After all, it is a ready-made measure of the performance of the markets on the whole. The components are spread across different sectors and are also of different market capitalization.
If you need to track how the market is doing, just this one measure is enough!
So let’s take a look at how the Nifty Total Market Index has been performing in the past. In this blog, we will explore the historical performance and conduct an in-depth analysis of this index.
Exploring the Historical Performance
Since its inception, the Nifty Total Market Index has provided a price return of about 12.99%. In comparison, the Nifty 50 has provided a price return of 11.21% in its lifetime.
This means the Nifty Total Market Index has largely outperformed the Nifty 50! To better understand its historical performance, let’s take a look at the historical price charts.
Nifty Total Market Index Performance:
| Timeframe | Price Return (%) | Total Return (%) |
| Since Inception | 12.99 | 14.54 |
| 1 Year | 11.37 | 12.35 |
| 5 Years | 11.32 | 12.54 |
Key Takeaways and Insights
The Nifty Total Market Index was launched in October 2021. Since then, it has grown at about 11% per year.
1. Market Downturns
When the COVID-19 pandemic and the ensuing lockdown were first announced, the global stock markets took a tumble in March 2020. Nifty and Sensex both recorded 4-year lows and recorded the worst single-day falls in history.
Please keep in mind, however, that this fall was not restricted to the Indian stock market. As panic around the spreading COVID cases spread, there was a massive sell-off in the global financial markets.
2. Periods of Strong Growth
Since then, however, the stock markets have been recovering steadily. The Nifty 50 grew by almost 2.4 times. This period of strong recovery and growth was also noted in the Nifty Total Market Index.
The growth of manufacturing in India, the favorable government policies, and overall optimism about the future of the Indian stock market all contributed to this growth.
3. Stability
If you zoom out on a price chart, you will start to see a much smoother line. But, if you zoom in, you will notice a lot of small ups and downs which contribute to the overall movement of the market.
This means, in the short run, there is not a lot of stability, even in the Nifty Total Market Index. After all, it includes 750 different stocks, ranging across the Nifty 500 and the Nifty Microcap 250 indices. Fluctuations in the individual stock prices also have an impact on the overall index.
In the long run, however, the short-term fluctuations even out, and we get more stable and consistent growth.
4. Volatility Analysis
Consider the following table:
| Statistics | 1 Year | 5 Year |
| Standard Deviation | 10.84 | 18.66 |
| Beta (NIFTY 50) | 0.94 | 0.95 |
| Correlation (NIFTY 50) | 0.96 | 0.99 |
The standard deviation shows how much the index deviates from its average price.
Just to put this in perspective for you, the standard deviation for the Nifty 50 is 23.19, which is slightly higher than the Nifty Total Market Index. This means the Nifty 50 is slightly more volatile than the Nifty Total Market Index.
5. Risk-Return Tradeoff
This is a very personal decision for every investor. You should only invest if you feel the expected return is worth the risk you’re taking.
In the short-term, volatility can be quite high and the investment can be more risky. But if your investment horizon is at least a few years long, the volatility is lower and the risk exposure falls, too.
Read more: Index Funds and Passive Investing
Conclusion
Analyzing the Nifty Total Market Index is a must before investing for anyone. Only by going through the performance metrics and the historical returns can you understand the asset in detail and decide whether your investment goals and risk appetite align.
