After recording a sharp outperformance in the previous years, Dalal Street took a breather in Samvat 2081. As equities took a backseat, the rally in precious metals stole the show, as a risk-off environment amid global turmoil, trade tensions and slowing consumption weighed on investors!
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Caution was the word in the previous year, as investors took a breather, assessing their past returns and pausing for a valuation reset. The Centre fired off measure after measure to spur growth: from the income tax rejig, GST rationalisation, and the 100 basis points rate cut from the Reserve Bank of India. After a cautious first half of the year, Dalal Street took these measures in its stride, rallying smartly in the second half of the year!
Despite a time correction, Nifty 50’s valuation of 23.1x based on trailing 12 month earnings remains solidly above the 10-year average mark, as the index remained range-bound in Samvat 2081
Gold and silver have outshone most asset classes this year, delivering strong returns amid global uncertainties. While gold benefited from de-dollarisation, safe-haven demand and central bank buying; silver gained from both its precious metal appeal and industrial use in various technologies.
Local investors are staying strong, and growing their influence. Foreign portfolio flows to India and other emerging markets have slowed down due to China's attractive valuations. Key drivers ahead will be global trade pacts, India's earnings growth and precious metals’ performance. Mutual fund flows, meanwhile, should keep markets supported.
After two years of broad gains, sectoral performance in 2025 shows clear moderation. Defence continues to lead with a 25 percent rise, while autos, financials, and commodities post steady gains. In contrast, IT, realty, and FMCG have turned laggards, slipping 18 percent, 16 percent, and 4 percent, respectively, as markets consolidate after a strong run.
Data Source: Ace Equity and Bloomberg.
