Nifty Indices Broad Market and Sector Review – August 2026: Nifty Indices Performance and Valuation at a glance 06Sep2026
(This is my 534th blog since 2010. Over the years, I have covered global financial markets, with a focus on India, and continue to share insights to help readers understand complex topics in simple language.
The views expressed here are for information purposes only and should not be construed as a recommendation or investment advice. While the author is a CFA Charterholder with nearly 25 years of experience in financial markets, this content is intended to share general insights and does not constitute financial guidance.
Please consult your financial adviser before taking any investment decision. Safe to assume the author has a vested interest in stocks / investments discussed if any.)
This periodic snapshot brings together the latest performance and valuation data, as of 31Aug2026, for the broad Nifty indices and the major market sectors.
The aim is to understand what the numbers are saying today. It is not to predict what will happen next.
The data in this article are as on 31Aug2026, unless otherwise stated.
This article builds on an earlier article (with data as of 31Jul2026). Please check it if you're interested.
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1 Broad Market Performance
Chart showing Nifty Broad Indices Trailing Returns >
The broad market delivered mixed results over different time periods.
During the last one month, Nifty Smallcap 250 was the strongest performer with a return of 5.5 per cent. Nifty Smallcap 250 also posted a healthy gain of 2.6 per cent.
Looking at the past three months, 1-year, 5-year and 10-year, Nifty Microcap 250 is the strongest performer of all broad market indices.
On a 3-year basis, Nifty Next 50 provides the highest returns, closely followed by Nifty Microcap 250 index.
The long-term picture continues to be encouraging. Over three, five and ten years, every broad market index has delivered positive annualised returns, though Nifty 50 has been the weakest of them.
One important lesson is that market leadership keeps changing. The best-performing index over one year may not remain the best over longer periods.
2 Broad market valuations
Chart showing Nifty Broad Indices Valuation Data >
It's better for investors to look at trailing returns in conjunction with valuations.
Among the broad indices, Nifty Next 50 has the lowest PE ratio at 19.5. Nifty 50 is close behind at 20.4 and it also offers the highest dividend yield of 1.17 per cent.
Nifty Smallcap 250 index has the highest PE ratio, while Nifty Microcap 250 offers the lowest dividend yield.
It's apparent larger companies are more reasonably valued than smaller companies based on current market prices.
3 Sector performance
The sector analysis covers the top 10 sectors by weight in the Nifty Total Market Index as of the latest available data. The sector weights are shown in the table below.
The largest sectors by market weight provide a useful view of where market value is concentrated and how different parts of the market are performing.
Chart showing Top 10 Nifty Sectors by Weight in Nifty Total Market Index – Trailing Returns Performance >
As shown in the above chart, the top 10 sectors in Nifty Total Market index have a representation of 82.9 per cent in it.
Sector performance often changes much faster than broad market performance.
On a 3-year and 5-year basis, auto and capital goods have been the best performers among sector indices.
Telecommunications and Metals have delivered an impressive recovery over the past year.
Financial Services remains the largest sector in the market. Its long-term returns have been steady rather than spectacular.
Healthcare has remained resilient across most time periods.
Not every sector has performed well recently. FMCG, Oil & Gas and IT have recorded weaker one-year returns.
Surprisingly, Nifty Consumer Services delivered a strong 3-month return of 16 per cent.
As is known globally, sector performance is cyclical as market participants undertake sector rotation quite often.
(check References and Additional Notes at the end of the blog for calendar year returns of Nifty Sector Indices for years 2018 to 2025)
4 Sector valuations
Chart showing Top 10 Nifty Sectors by Weight in Nifty Total Market Index – Valuations >
Sector valuations show where investor expectations are highest.
Financial Services has one of the lowest PE ratios at 16.1. Oil and Gas also trades at a relatively low PE of 11.0.
At the other end of the spectrum, Capital Goods and Healthcare trade at PE ratios above 44. Investors appear willing to pay a premium for their expected future growth.
Dividend yields also differ across sectors.
IT and Oil and Gas offer the highest dividend yields among the major sectors.
Consumer Services offers the lowest dividend yield.
High valuations do not automatically mean a sector is overvalued. Likewise, low valuations do not guarantee better future returns. Valuations simply reflect what the market currently expects.
5 Summary
Markets are dynamic. Every month / quarter brings new winners, new laggards and changing valuations.
That is why it is useful to review the data regularly instead of relying on headlines or short-term market moves.
The purpose of this periodic review is to provide a simple, data-based view of the market. Over time, these updates will also help readers see how trends evolve across market cycles.
This article is meant purely for educational purposes. It is not investment advice or a recommendation to buy or sell any security, index or mutual fund.
Past performance does not guarantee future returns. Please do your own research or consult a qualified financial adviser before making investment decisions.
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References and Additional Notes:
Nifty 500 factsheet
NSE Index dashboard Aug2026
Nifty Return Profile
Nifty Index factsheets
Nifty Sectoral Indices Calendar Year Returns: 2018 to 2025: Top 10 Sectors in Nifty Total Market Index > Click on the chart to view better >
Screenshot of Nifty Total Market (750 stocks) factsheet 31Aug2026 >
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