FY25 Market Recap: Sensex, Nifty defy turbulence with 5% gains; defence shines, FIIs retreat

Despite the five months of consecutive falls between October and February, the Indian equity markets closed FY25 in the positive zone. BSE Sensex increased by 5.1 per cent, while Nifty50 went up by 5.3 per cent, with the 6 per cent jump in March bringing much relief. Both indices closed around 10 per cent off their all-time highs in September, though.

The fiscal year was characterized by volatility, driven mainly by political uncertainties, world economic trends, and corporate results. The markets saw a sharp correction after October, wiping out most of the advances registered up to September.

Key market-moving events in FY25

1. Post-election sell-off (June 2024): The BJP-led NDA government failed to secure a majority in the general elections, and this led to a sharp market correction. This was followed by a quick recovery.
2. Union Budget (July 2024): The July budget presented was a full budget and offered stability but not much in terms of triggers for a big rally.
3. GDP slowdown (Q2FY25): Economic growth fell to 5.4 per cent, the lowest in seven quarters, affecting investor sentiment.
4. Global factors: Donald Trump's tariff threats and FIIs diverting attention to China and the US subdued the mood.
5. September high & valuation froth: Nifty and Sensex hit all-time highs (26,277.35 and 85,978.25, respectively) before profit-booking began, as valuations became pricey.
6. FII outflows: Foreign investors sold Indian equities aggressively, leading to the market decline.

FII and DII fund flows

Foreign Institutional Investors (FIIs) remained net sellers in FY25, selling Indian equities amounting to Rs 1,27,041 crore. The sharpest monthly offloading was done in January at Rs 78,027 crore. However, Domestic Institutional Investors (DIIs) soaked up the pressure, and they too were net buyers with a massive Rs 6,06,368 crore inflow. Their peak monthly purchase occurred in October at Rs 1,07,255 crore.

Sectoral performance: Defence shines, media lags

• Top performers: The Nifty Defence index skyrocketed 37 per cent, making it the best-performing sector. Other winners included Nifty Financial Services, Nifty Pharma, Nifty Metal, and Nifty Consumer Durables, with gains between 19 per cent and 11 per cent.

• Laggards: The biggest underperformers were Nifty Media, Nifty Energy, Nifty PSU Bank, and Nifty Oil & Gas, posting losses between 16 per cent and 8 per cent.

Top gainers & losers in FY25

Of the BSE 500 constituents, 245 stocks gave positive returns. Seven stocks became multibaggers, such as Mazagon Dock Shipbuilders, GRSE, Deepak Fertilisers, Lloyds Metals & Energy, and Godfrey Phillips India. Amber Enterprises and One97 Communications, the parent company of Paytm, also gave more than 90 per cent returns.

On the negative side, stocks like Delhivery, Birlasoft, Adani Green Energy, Mahindra Lifespace, and Relaxo Footwears took sharp cuts, falling by 43 per cent to 60 per cent.

What next for FY26?

With political certainty after elections, anchored GDP growth, and sectoral opportunities in pharma and defence, markets might have scope to move higher. Yet, cues from abroad, FII inflows, and corporate earnings will continue to dominate the direction of FY26.