How nifty will change in the coming decade

Going by the historical trend since the Nifty was created, almost all the entrants into the Nifty over the next decade will come from 100 stocks currently just underneath the Nifty. In order to assess which of these 100 companies will find themselves in the benchmark a decade hence, it is worth first trying to assess how the Indian economy will change over the coming decade.

We see three noteworthy changes taking place in India over the next decade:

• The continuing formalisation of the economy and the concentration of profit share in almost every sector in the hands of one or two companies.
• The formalisation of savings, away from physical savings, and toward financial savings.
• The continuing formalisation of retail and, more generally, of distribution channels in India.
• Let’s delve deeper into each of these changes.

1) India is already an economy with extraordinary levels of profit share concentration in many key sectors. For example, in paints (Asian Paints, Berger Paints), premium co...

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