Fiscal Year 2025: A Year of Volatility in the Stock Market; Sensex and Nifty Show Slight Gains, Gold Surges 37.7%. Rupee Depreciates by 2.1%; Market Under Pressure from FPI Selling.
Gold Share: Fiscal year 2024-25 proved volatile for equity investors. The first half of the year saw b market performance, but the second half experienced increased instability due to global and domestic factors. The benchmark Nifty index rose by 5.3% and the Sensex by 7.5%, representing weaker performance compared to the previous fiscal year. The Nifty Midcap Index closed with a 7.5% gain, and the Smallcap Index with a 5.4% gain. However, foreign institutional investor (FII) selling in the second half put pressure on the market.
Historic Surge in Gold Prices
Gold proved to be the most profitable asset for investors this fiscal year. Global uncertainties and a search for safe haven investments drove investors towards gold, increasing its price by 37.7% to $3,070 per ounce. This was the largest annual increase in gold prices since 2008. Geopolitical tensions, central bank gold purchases, and global economic uncertainty were the main drivers behind gold's price surge.
Slight Rupee Depreciation, but Eventually Recovered
The Indian Rupee depreciated by 2.1% in fiscal year 2025, exceeding the previous year's 1.5% decline. While the early months saw weakness in the Rupee, foreign investment and stock market strength in March led to some recovery.
Foreign Institutional Investor (FII) Selling
Throughout fiscal year 2025, FPIs maintained a selling spree for five consecutive months in the second half. Sluggish corporate earnings and high stock valuations prompted a cautious investor approach. Weaker corporate results in the September and December quarters impacted investor sentiment. However, market analysts believe that improved corporate profits in fiscal year 2026 and clarity in US trade policy could restore market stability.
Prospects for Fiscal Year 2026
The market may remain volatile at the beginning of fiscal year 2026, but improvement is expected in the second half. Increased corporate earnings, growing interest from domestic and foreign investors, and global market stability could provide new direction to the market. For investors, this year will necessitate a balanced strategy and a long-term investment approach.
