The financial year 2024-25 will be remembered not for the noise in the market but for the sharp lessons it handed investors.
As global uncertainties deepened — trade war threats, tariff escalations and a persistently hawkish US Federal Reserve — the capital went looking for shelter. It didn’t find comfort in India’s stock markets nor the “evergreen” real estate but in the gleam of gold and silver.
Number theory
Precious metals staged a stunning comeback. Gold returned 38 percent and silver edged past 36.7 percent.
These are not normal numbers. These are crisis numbers— when investors retreat to safety, hedge against inflation and seek refuge in assets the government can’t print. In a year that saw the rupee depreciate 2.4 percent against the dollar, the message couldn’t be louder: fear was back and priced in.
Equities, which thrilled investors in the previous year, disappointed in FY25. The benchmark Nifty could eke out a meagre 5.34 percent gain and the 50-stock Sensex 5.11 percent.
The story here is not the flat indices but the contrast in sectoral performance.
Metals and banks posted modest gains, but oil and gas and real estate bled. Foreign portfolio investors, who muscled the 2024 rally, packed their bags — bringing in just $2.7 billion in FY25, down from a staggering $41 billion the year before. A vacuum of this size would always leave a dent.
Real estate — the great Indian dream, the fallback of conservative investors — barely moved.
The Reserve Bank of India’s housing price index clocked a 3.1 percent rise. For an asset class that offers little to no yield and is notoriously illiquid, this amount of capital appreciation is underwhelming.
It’s hard to justify real estate purchases on speculation alone, especially when bank deposits and government securities offer better returns without the headaches of stamp duty, tenant risk and long holding periods.
Fixed income, often dismissed as dull, quietly held its ground. The average weighted term deposit rate stood at 7 percent, while the 10-year G-sec yielded 6.7 percent. In a year when equity and real estate underperformed, these instruments suddenly looked respectable — maybe even wise.
The new normal
These insights are drawn from a recent note by Bank of Baroda economist Jahnavi Prabhakar, who closely examined asset class performance using data up to March 2025. Her analysis paints a clear picture: investors who spread their capital across diverse instruments were the ones who weathered the storm.
FY25 underscored the fading relevance of one-size-fits-all investing. Gone are the days when you could throw money at real estate or ride the Sensex and expect double-digit returns. The world has changed. Capital is more cautious and more calculating. Global volatility is not a passing phase — it’s the new normal.
And yet, there is optimism for FY26. The government’s push for consumption through income-tax relief, softer inflation, and expected liquidity support from the RBI could rekindle domestic demand. If foreign investors do return in strength, and if the dollar stabilises, the rupee could claw back lost ground. But these are big "ifs" and with Donald Trump's tariffs upending the global trade and sending markets reeling, investors will have to be quick learners.
FY25 was a reminder that performance doesn’t come from predicting headlines but from building portfolios that can absorb shocks. The winners weren’t the ones who chased momentum but those who stayed diversified, disciplined — and a bit paranoid.
It was the year gold was king, and every other asset class kneeled.
(Banking Central is a weekly column that keeps a close watch on and connects the dots regarding the sector's most important events for readers.)
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