India Markets 2025: Year-End Review and What the Data Says
Introduction
As 2025 draws to a close, Indian markets have delivered modest but meaningful returns, supported by domestic investor participation and key macro trends. Equity indices, inflation, precious metals and sector performance show a mixed but insightful picture for investors preparing portfolios for 2026.
Equity Markets in 2025: Actual Index Returns
Nifty 50 (India’s benchmark index)
- As of market close on December 29, 2025, the Nifty 50 index stood near 26,000 levels.
Year-to-Date Performance (2025)
- According to verified year-end reporting, the Nifty 50 delivered around +9.4% return in 2025.
This contrasts with earlier years and reflects moderate gains rather than a sharp rally.
Broader Indices (2025)
- Nifty Midcap 150 delivered lower gains (near +4.2%) and Nifty Smallcap 250 was negative (about −8.4%).
Interpretation:
Indian equities had a consolidation year in 2025, with large caps outperforming broader markets. Small cap weakness highlights investor caution and profit-booking in higher-risk segments.
Sector Performance Dynamics
While exact percentage returns vary by sector, multiple market analyses throughout 2025 highlighted:
- Large caps with stable earnings tended to outperform more cyclical, speculative segments.
- Technology and export-driven sectors were weaker due to global demand pressures.
Macroeconomic Indicators: Inflation and Growth
Inflation (CPI in India, 2025)
- CPI inflation remained historically low for much of the year. India recorded inflation near 0.25% in October before edging up to approximately 0.71% by November 2025, still below RBI’s comfort level.
Economic Context:
Low inflation supports consumer purchasing power and can encourage central bank flexibility on interest rates — an important factor for equity valuations.
Valuations: A Reality Check
Valuations: Where Did Markets End 2025?
Nifty 50 Valuation Metrics
| Metric | Value |
|---|---|
| Nifty 50 P/E | ~22.5 |
| Long-term Average P/E | ~18 |
| Earnings Growth (FY25) | ~12–14% |
Valuation takeaway:
Markets were not cheap, but also not in bubble territory
Mid and small caps traded at significant premiums to historical averages
Precious Metals: Gold and Silver Performance
Gold in 2025:
- Gold prices rose sharply in 2025 by approximately 60–80%, crossing around ₹1.38 lakh per 10 g by year-end.
Silver in 2025:
- Silver outperformed gold, with gains exceeding 100% at times during 2025.
Comparative Returns:
Independent analyses also show that silver surged around 135–140% and gold rose about 75–80% in 2025, far ahead of equity returns.
Context:
This extraordinary performance is attributed to global uncertainty, safe-haven demand and strong industrial interest in precious metals.
Asset Class Returns in 2025
| Asset Class | 2025 YTD Approx Return |
|---|---|
| Nifty 50 | +9.4% |
| Nifty Midcap 150 | +4.2% |
| Nifty Smallcap 250 | −8.4% |
| Gold (INR) | +80% |
| Silver (INR) | +160% |
Interpretation:
Precious metals massively outperformed Indian equity indices in 2025. This is uncommon and highlights investor risk aversion and macro volatility.
Foreign vs Domestic Flows: A Deeper Look
According to year-end reporting:
- Foreign portfolio investors (FPIs) posted record outflows (~₹1.6 trillion) in 2025 due to valuation concerns and global macro pressures.
- Domestic institutional inflows remained strong, helping cushion markets and support valuations.
This dynamic underscores the structural shift where Indian markets are influenced more by domestic flows than external capital.
What 2025 Taught Investors
- Diversification works: Precious metals cushioned portfolios when equities slowed.
- Valuation discipline is key: Markets with stretched valuations need earnings follow-through.
- Risk profiling matters: Small caps underperformed as volatility stayed elevated.
What to Watch in 2026
Key variables for investors include:
- Corporate earnings trajectory in India
- Global rate trends and inflation dynamics
- Foreign flow reversal or stabilization
- Commodity price shifts and currency impacts
Markets pricing will reflect these macro and micro fundamentals rather than sentiment alone.
A year-end market review is an ideal time to reassess asset allocation. At CapitaGrow, we help investors align portfolios with long-term goals through structured review and disciplined investing strategies. Contact CapitaGrow to begin your investment journey.
Author Bio
Rajesh Narayanan
AMFI-Registered Mutual Fund Distributor and founder of CapitaGrow. Rajesh delivers data-first investing insights with a focus on long-term wealth creation.
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