2025 in rear view—moderating equity returns; large caps lead

Indian equity market saw further moderation in returns in 2025—Nifty 500 index was up c.7% in 2025, vs c.15% in 2024 and c.26% in 2023. Large caps outperformed both mid-cap and small-cap indices. In fact, Nifty Smallcap 100 was down 5.6% in 2025, after a stellar 24% appreciation in 2024. Nifty-50 returned a moderate 10.5% in 2025 vs. 8.8% in 2024, with trailing 3-yr CAGR of 13%. Nonetheless, from the lows seen in late Feb / early March, all three indices were up strongly by Dec-end: Nifty midcap 100 was up 26% followed by Nifty smallcap index 21%, while Nifty 50 up 18%.

- By: Pankaj Murarka Founder & CIO Renaissance Investment Managers & AdvisorAlpha

Returns from each of the major indices were front-loaded in 2025, with flattish to negative returns in the second-half, as markets grappled with high tariffs by US on Indian imports, surge in new equity supply, and rising FPI equity outflows—partly driven by a steep 4.8% INR depreciation vs USD in 2H.

For the full year 2025:

1. Net domestic flows into active equity MFs were robust at US$41bn (11M annualized) (2024: US$46bn)

2. Net FPI outflows in 2025 were highest-ever at US$18.8bn (2024: US$0.8bn outflow)

3. New equity supply [IPO + QIP + OFS] was US$33bn (2024: US$42bn). The decline was mainly because of lower QIP volumes (down 47% yoy). Nonetheless, IPO supply remained robust at around US$22bn in 2025 (similar to 2024 level)

India underperformed global markets in 2025; Gold and Silver stole the limelight

MSCI-India TR Index had its worst year of underperformance relative to the MSCI-EM TR index, at 30% in 2025 (in USD-terms). Korea, China, Brazil, Mexico and Japan were among the best performing markets, with their USD-returns ranging 25-75% for the year.

However, precious metals outshined the equity markets in 2025, as Gold, Silver and Platinum returned 65%, 140% and 120%, respectively, in USD terms in 2025.

Tenth straight year of positive returns from Nifty-50-anti fragile India?