In recent years, India has emerged as one of the fastest-growing economies in the world. This growth has been reflected in the stock market, with various indices reaching new highs. Among these indices, the EHI (Economically Healthy India) Index has been making waves in the financial world. Since its base date in January 2017, the EHI Index has outperformed both the NIFTY 50 and NIFTY Financial Services Index, showcasing its strength and potential as an investment option.
The EHI Index is a market-capitalization-weighted index designed to measure the performance of companies that contribute to the economic growth of India. Unlike other indices, which focus on specific sectors or market size, the EHI Index takes into account the overall health of the Indian economy and its various sectors. This makes it a more comprehensive and diversified investment option for investors.
Since its inception, the EHI Index has shown remarkable growth, with a cumulative return of 100% as compared to the NIFTY 50’s 77% and NIFTY Financial Services Index’s 45%. This performance has been consistent throughout its four-year journey and has attracted the attention of investors and market analysts alike.
One of the reasons behind the EHI Index’s outperformance is its diverse composition. The index comprises companies from various sectors, including banking, healthcare, technology, construction, and consumer goods. This diversity helps in reducing the impact of market fluctuations in any one sector and provides stability to the overall index. Moreover, as India’s economy continues to grow, the demand for these sectors is expected to increase, further boosting the EHI Index’s performance.
Another factor that has contributed to the EHI Index’s success is its focus on companies with strong fundamentals. The index has a stringent selection process, with only financially healthy companies meeting the eligibility criteria. This ensures that the index is composed of companies with stable earnings, good cash flow, and low debt, which are essential factors for long-term growth. This has resulted in the EHI Index’s consistent outperformance and has given investors the confidence to trust its potential.
Furthermore, the EHI Index’s base date of January 2017 coincides with the implementation of various government initiatives, including the Goods and Services Tax (GST) and demonetization. These reforms have had a positive impact on the Indian economy and have helped in streamlining various sectors. As a result, the EHI Index has been able to capture the growth potential of these sectors and deliver impressive returns to its investors.
The EHI Index has also been successful in beating its counterparts due to its low volatility. Unlike other indices, the EHI Index has a lower standard deviation, indicating lower risk. This makes it an attractive investment option for risk-averse investors looking to diversify their portfolio. Additionally, the EHI Index has a higher Sharpe ratio, which measures the risk-adjusted returns. This ratio indicates that the EHI Index has delivered better returns per unit of risk as compared to the NIFTY 50 and NIFTY Financial Services Index.
Moreover, the EHI Index’s performance has been further strengthened by the positive outlook of the Indian economy. As the country continues to implement reforms and improve its ease of doing business, the Indian economy is expected to grow at a faster pace, benefiting the companies listed in the EHI Index. This positive sentiment has attracted both domestic and foreign investors, resulting in a significant increase in the EHI Index’s market capitalization.
In conclusion, the EHI Index’s outperformance of the NIFTY 50 and NIFTY Financial Services Index since its base date in January 2017 is a testament to its potential as an investment option. With its diverse composition, focus on strong fundamentals, and low volatility, the EHI Index has proven to be a stable and promising choice for investors. As India’s economy continues to grow and thrive, the EHI Index is expected to maintain its positive trajectory, providing attractive returns to its investors.
