The Indian equity market witnessed a historic year in 2025, with the benchmark Nifty 50 index extending its remarkable bull run for a tenth consecutive year. However, the headline story was the spectacular outperformance by a host of blue-chip stocks, which left the broader index gains far behind. A shift in investor sentiment away from richly valued small-caps fueled a powerful rally in large-cap stalwarts, with several delivering returns as high as 72%.
A Decade of Gains and a Shift to Large-Caps
The Nifty 50 concluded the calendar year 2025 with a solid gain of 10.5%, maintaining its unbroken winning streak. The index also scaled a fresh record peak of 26,325 in November, a milestone achieved after a gap of 14 months. This performance, however, starkly overshadowed the broader market. The Nifty Midcap 100 managed a modest 5.8% rise, while the Nifty Smallcap 100 index skidded 5.6%, marking its first annual decline in two years.
This divergence highlighted a significant rotation of funds. As the small-cap segment faced earnings per share (EPS) cuts amid stretched valuations, investor confidence pivoted towards the relative safety and improving prospects of large-cap companies. This made the blue-chip segment the clear standout performer of the year.
Top Performers: Finance, Autos, and Metals Lead the Charge
Data from Trendlyne reveals that of the 50 index constituents, 32 stocks delivered positive returns in 2025. Impressively, 26 of these stocks beat the Nifty 50's return, rallying anywhere between 11% and 72%.
Shriram Finance emerged as the undisputed champion, skyrocketing by 72.4% to ₹996 per share. This monumental surge marked its fifth consecutive year of gains, solidifying its position as a market darling.
The automobile sector was another major winner. Benefiting from a combination of a Goods and Services Tax (GST) overhaul and a series of interest rate cuts by the Reserve Bank of India (RBI), demand for select auto stocks surged. Maruti Suzuki India zoomed 54%, while Eicher Motors followed closely with a 52% rally. Mahindra & Mahindra also posted a strong gain of over 23%.
Metal stocks glittered brightly on the back of rising prices across base and precious metals. Hindalco Industries delivered a stellar 47% return. Improving steel spreads propelled Tata Steel and JSW Steel, both of which rallied by a solid 30%.
Banking and Financials Join the Rally
The financial sector contributed robustly to the market's performance. All major banks, including State Bank of India, Kotak Mahindra Bank, Axis Bank, and HDFC Bank, posted strong returns ranging between 12% and 24%. Non-banking financial companies (NBFCs) and insurance stocks were not far behind. SBI Life Insurance soared 46.3%, Bajaj Finance jumped 45%, and Bajaj Finserv and HDFC Life also registered impressive gains.
In a significant move, Reliance Industries, India's most valuable company, recorded its biggest annual gain since 2020, advancing 29% to ₹1,570 per share.
Other notable outperformers included Bharat Electronics (36.3%), Bharti Airtel (32.6%), Tata Consumer Products, Titan Company, Asian Paints, Adani Ports, Nestle India, Grasim Industries, Larsen & Toubro, and IndiGo, all surging between 12% and 35%.
Analysts Bullish on a Turnaround in 2026
Looking ahead, leading brokerages express optimism for the Indian stock market in 2026. Domestic firm Axis Securities believes the key headwinds that dampened sentiment—such as weak corporate earnings, rich valuations, and tariff concerns—are likely to ease. The brokerage anticipates the market transitioning from a phase of valuation-led consolidation to an earnings-driven growth cycle.
Motilal Oswal also remains positive, stating equities are well-positioned for a recovery after the relative underperformance in 2025. They cite improving earnings visibility, supportive domestic macroeconomic conditions, and an easing geopolitical environment as key tailwinds. The firm expects Nifty 50 earnings growth to rebound sharply to 9% in FY26 (from 1% in FY25) and further accelerate to 15% in the subsequent years.
This constructive view is echoed by global giants like Goldman Sachs, JP Morgan, and Jefferies, who have turned bullish on Indian markets. They expect that GST rate cuts and further repo rate reductions could boost consumption and drive a sustained earnings recovery, setting the stage for another potentially rewarding year for investors.
