FY25 rear view: Equities disappoint, gold shines as standout performer

The financial year 2024-25 (FY25) was marked by a tale of extremes for equity investors. A promising first half gave way to turbulence in the second, which erased much of the early gains.

 

The Nifty rose by 5.3 per cent, while the Sensex increased by 7.5 per cent — both their weakest annual performances since FY23. The Nifty Midcap 100 and Nifty Smallcap 100 indices gained 7.5 per cent and 5.4 per cent, respectively.

 

Gold emerged as a standout performer, surging 37.7 per cent to $3,070 per ounce — its best show since FY08 — as investors flocked to safe-haven assets amid rising global uncertainty.

 

The rupee depreciated by 2.1 per cent during the financial year. In FY24, the rupee had depreciated by 1.5 per cent. The rupee continued to hit new lows from January, but it recovered almost all of its losses against the US dollar in March, on the back of strong inflows into domestic equities and debt markets.  

 

In FY25, the rupee proved more resilient than many regional counterparts, underscoring its relative strength despite global headwinds. 

 

The Sensex climbed roughly 15 per cent during the first six months of the financial year. However, disappointing corporate earnings during the July-September and October-December quarters made elevated valuations unsustainable, and sustained selling by foreign portfolio investors (FPIs) dampened the market’s momentum.

 

FPIs were net sellers in five of the past six months first by shifting their attention to China, lured by its attractive valuations and government stimulus measures.

 

Experts say the trajectory of FY26 will depend on two critical factors: a potential revival in corporate profits and the unfolding of US trade policies. They expect that the initial part of the financial year could be more volatile, while the second half could see the markets make positive strides. 

 

In FY25, the rupee proved more resilient than many regional counterparts, underscoring its relative strength despite global headwinds.

 

The Sensex climbed roughly 15 per cent during the first six months of the fiscal. However, disappointing corporate earnings during the July-September and October-December quarters, made elevated valuations unsustainable and sustained selling by foreign portfolio investors (FPIs) took wind of the sails for the market.

 

FPIs were net sellers in five of the past six months first by shifting their attention to China, lured by its attractive valuations and government stimulus measures.

 

Experts say the trajectory of FY26 hinges on two critical factors: a potential revival in corporate profits and the unfolding of US trade policies. They believe the initial part of the fiscal could be more volatile, while the second half could see the markets making positive strides.