India's Stock Market Performance and Outlook in 2025
A comprehensive analysis of India's stock market performance in the first half of 2025, highlighting the divergence between large-cap and small-cap stocks and evaluating the potential for a turnaround in the coming months.
India's stock market in the first half of calendar year 2025 (H1CY25) witnessed a mixed performance with large-cap stocks showing strength while small-caps struggled. Benchmark indices like the Sensex and Nifty posted strong gains of around 8%, but mid-cap and small-cap indices remained flat or fell, reflecting investor caution amid global uncertainties and valuation concerns.
Foreign institutional investors reduced their exposure to Indian small-cap stocks due to geopolitical tensions and weak corporate earnings. However, signs of recovery emerged in late Q2 with small-cap indices staging a comeback fueled by improving earnings and renewed interest from domestic investors.
Macroeconomic tailwinds, dovish monetary policy, and easing inflation are aligning in favor of a potential small-cap resurgence in the second half of 2025. While valuations remain a concern, sector-specific fundamentals and investor flows indicate ongoing confidence in the long-term growth potential of small-cap stocks.
Disclaimer: The views expressed above are those of individual analysts, and investors are advised to consult certified experts before making investment decisions.