Shankar Sharma Analyzes Long-Term Returns of Nifty 50 and Bank Fixed Deposits

Risk-Adjusted Returns Take Centre Stage in Investing Debate

Veteran investor Shankar Sharma has reignited the long-running debate between equity investing and traditional fixed deposits after sharing a data-driven comparison of Nifty returns and bank FD performance over the last 12 years. In a post on social media platform X, Sharma, Founder of GQuant Investech, casually analysed Nifty data on a "beautiful lazy Saturday morning" while sipping coffee, comparing post-tax and risk-adjusted returns of the Nifty 50 Total Return Index, the Nifty in dollar terms, and bank fixed deposits between May 15, 2014, and May 15, 2026.

What caught Sharma's attention was not just the return figures, but the sharp difference in risk-adjusted performance between equities and fixed deposits. This comparison highlights a point often ignored during bull markets - that returns alone may not present the complete picture unless adjusted for risk, taxation, and currency depreciation.

Key Figures:

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According to the figures shared by Sharma, the Nifty 50 Total Return Index delivered a post-tax CAGR of 9.38% during the 12-year period, while the Nifty in dollar terms generated a post-tax CAGR of 5.11%. However, both equity calculations assumed an annualised volatility of 15%, significantly impacting their risk-adjusted return ratios. Sharma calculated the tax- and risk-adjusted return ratio for the Nifty TR Index at 0.617, while the dollar-adjusted Nifty figure stood at 0.336.

In contrast, bank fixed deposits delivered a lower post-tax CAGR of 4.93%, but because of their extremely low annualised volatility of 0.25%, the tax- and risk-adjusted return ratio surged to 19.720. The post quickly triggered widespread discussion among investors, particularly because Indian equities are often marketed as the superior long-term wealth creation avenue compared to traditional savings products such as bank deposits.

Sharma's comparison also drew particular attention because it reflected the impact of rupee depreciation over the years. While Indian investors often focus on index gains in rupee terms, global investors evaluate returns after currency conversion, making the effective returns considerably lower. The discussion also comes at a time when Indian equity markets are facing heightened volatility amid global macro uncertainty, geopolitical tensions, and concerns around slowing earnings growth in some sectors.

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