Global market capitalization experienced a significant surge in 2025, jumping by 22.1%, equivalent to $27.4 trillion. However, the Indian stock market's performance trailed behind, with a marginal increase of 2.8% year-on-year.
Global Surge and India's Underperformance
While global markets thrived, the Indian stock market's comparatively modest growth was influenced by several factors. These include consistent foreign outflows, a weakening rupee, and anxieties surrounding potential trade agreements with the United States. These elements collectively rendered Indian stocks more susceptible to global economic shocks. This underperformance also led to a decrease in India's share of the global market capitalization, as other Asian markets expanded more rapidly due to increasing demand in AI and chip related stocks.
In December 2025, India's contribution to global market capitalization was 3.5%. Although India remains a top 10 contributor, its peak was 4.6% in September 2024.
Asian Markets Lead the Charge
South Korea saw the most substantial increase in market capitalization, soaring by 77% to reach $2.7 trillion. China followed with a 34% increase, and Taiwan with 31%. Other notable performers included Germany (29%), Brazil (27%), the UK (27%), Indonesia (25%), and Japan (20%). The United States, while still a major player, recorded a more modest increase of 16%.
Domestic Market Performance
Despite the relatively smaller increase in market capitalization, the Indian equity markets delivered respectable returns in 2025. The Nifty 50 advanced approximately 10.6%, reaching a fresh all-time high of 26,325.80. The Sensex mirrored this strength, climbing roughly 9% to scale a record peak of 86,159.02. Bank Nifty emerged as a standout performer, surging over 16% to touch an all-time high of 60,114.30, significantly outpacing the broader indices. On January 2, 2026, the SENSEX rose to 85762 points.
Sectoral Highlights and IPO Boom
The Nifty PSU Bank Index topped the charts with gains of nearly 28%, followed by the Nifty Metal Index with 21.6%. The Nifty Auto Index rounded out the top three, advancing 21.1%. These sectors benefited from government infrastructure spending, production-linked incentive schemes, and accommodative monetary policy throughout the year.
India's primary market cycle experienced a boom, with 86 IPOs raising nearly ₹1.71 lakh crore between October 2024 and September 2025. New listings outperformed benchmark indices by nearly four times, supported by strong domestic liquidity.
Market Influences and Future Outlook
Rate cuts throughout 2025 anchored market confidence. There were three 25 basis points cuts to anchor market confidence.
Experts believe that the Indian stock market has been in a base-building mode for the last one and a half years and that the upcoming Union Budget 2026 holds the key to driving the Indian stock market to new record levels. Consumption-linked sectors are emerging as powerful drivers, aided by rising disposable incomes, improving rural demand, and policy tailwinds.
