India is a savings country. It suits the government very well. Most Indians keep the money in banks, national savings certificates, Kvp. Of course to ‘save’ Income tax they put the money in LIC.

When the government gets cheap money it is happy. Of course these days it needs the equity market also has to do well – after all it has to sell equities too!

Now a few (ok quite a few) people are happy to keep writing saying ‘The market has gone nowhere’ …which is not very wrong too.

The Index was 18000 4 years ago and it is still there….so it has really not gone anywhere.

However there are many shares which have done well, and far more importantly there would have been a 2-4% dividend yield. Now consider the TOTAL RETURN INDEX….or the INDEX with reinvestment of dividend. I do know that there is a total return index, it would be interesting to do a simple calculation of what returns one has got over the past say 30 years ASSUMING A RE-INVESTMENT of dividends. I can assure it will be MUCH more than 17-18% which is the return touted over the life of the sensex – 1979 to 2012.

Anybody who has done the exercise? I think Deepak Shenoy of capitalmind.in has done it, but not sure….

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  1. Hi Subra,

    Total Return Index values are available on NSE. As a firm believer of passive investment i keep tack of this Index. In last 10 years starting from 2nd Sept 2002 upto 1st Aug 2012 this index has grown by 20% CAGR. If one have done simple SIP, would have got XIRR of 11%. Even if you consider growth from 2nd Sept 2002 up to 2nd Dec 2008 i.e when market went down from its lifetime high….this index has given 19% CAGR….

    Waaaooooo…..retrun…..but still people dont believe in equity & go to FDs….. 🙁

  2. JV i know about the Nifty total return index. I wanted Sensex total return index – from 1979 till date. I still think it would be in the 19-20 range esp if you ignore taxation.

    Dividends were tax free only from 1992….onwards

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