India's equity market has swung between gains and losses over the past year. While there have been moments of optimism, multiple global factors have pulled the market down, making it unpredictable.
In the first half of FY25, the Nifty 50 Index surged by 15.6%, but those gains were wiped out in the latter half due to global economic uncertainties, rising trade tensions, FII selling and weaker domestic spending. This downturn has affected several key indices. According to Reuters, Indian stocks have suffered their longest slump in nearly three decades, erasing almost $1 trillion in market value in the past five months.
At an event, Radhika Gupta, CEO of Edelweiss Mutual Fund, said, “Nifty is like Shah Rukh Khan – he has had some bad patches but has delivered most of the time.”
In this edition of Chart of the Week, we look at the top four indices with the highest gains and losses over the past year.
Strong momentum driven by Government plans boosts SME growth
The BSE SME IPO Index has gained 58.2% over the past year. The top performers in the index include Mayank Cattle Food, Qualitek Labs, and Gabriel Pet Straps, with returns of 93.1%, 62.3%, and 46.9%, respectively.
The surge in SME IPOs is driven by a combination of government initiatives, such as the Mudra Scheme, tax benefits, and the Production Linked Incentive (PLI) program, which have created a favorable environment for small and medium enterprises. Additionally, rising investor interest and strong performance across various industries have further fueled growth in this segment.
The Nifty Midcap Liquid 15 Index includes the 15 most liquid mid-cap stocks listed on the NSE. Over the past year, the index has gained 15.3%, driven by strong performances from its key constituents. Dixon Technologies surged 90.9%, driven by its expansion in electronics manufacturing and collaborations with global brands. The growing shift towards diversifying manufacturing hubs beyond China further boosted its growth.
Indian Hotels Company gained 38.6%, supported by a strong recovery in domestic tourism and strategic expansion plans, including new hotel developments, contributing to higher earnings.
Defensive indices grow in a bearish market
The BSE Healthcare Index includes companies involved in the pharmaceuticals & biotechnology, and healthcare equipment industries. Over the past year, the index has gained 18.3%. The top gainers in this sector include Blue Jet Healthcare, Wockhardt, and Suven Pharmaceuticals, with gains of 164.3%, 159.4%, and 84.3%, respectively.
The Centre’s PLI scheme drove growth in healthcare by boosting domestic manufacturing and reducing import dependence, particularly for critical active pharmaceutical ingredients (APIs). In addition, the sector has expanded its contract development & manufacturing organisations (CDMOs), as global pharmaceutical companies diversify supply chains beyond China. Over the past year, the Nifty Financial Services index has gained 15.4%. The top performers in this index include Muthoot Finance, Cholamandalam Investment & Finance, and Bajaj Finance, with a gain of 72.9%, 38.6%, and 31.7%, respectively.
The index gained over the past year due to expectations of interest rate cuts, which boosted credit demand and improved liquidity. Rising domestic gold prices and increased collateral value supported strong demand for gold loans, further supporting earnings.
Rising costs lead to a decline in the Nifty Energy and Nifty PSU Bank indices
The Nifty Energy Index has fallen 15.1% over the past year and contributes 10% to the Nifty 50, making it the third-largest contributor. The index includes companies from the oil & gas and utilities sectors. Firms like Adani Green Energy, Adani Total Gas, and Indian Oil Corporation saw the highest declines at 52.7%, 38.6%, and 22.5%, respectively, over the past year.
Oil & gas stocks fell due to higher purchase costs after the Centre reduced cheaper gas supplies. Energy price fluctuations, influenced by global demand, geopolitical tensions, and potential US policy changes, added to the pressure.
Oil and gas firms struggled with losses in the LPG segment as the government kept domestic LPG prices unchanged despite rising raw material costs. The narrowing discount on Russian crude also reduced the price gap between crude oil and refined products, directly impacting the Gross Refining Margins (GRMs) and earnings. The Nifty PSU Bank Index fell by 13.5% over the past year. Punjab National Bank, Canara Bank, and Indian Overseas Bank led the decline, dropping by 24.6%, 24.1%, and 29.9%, respectively, over the same period. Weak quarterly updates drove this decline, as many banks struggled with sluggish deposit growth, leading to concerns about slowing business momentum.
Nifty200 Alpha 30 and Nifty Media plunged due to weak spending and a slower growth rate
The Nifty200 Alpha 30 consists of 30 stocks selected from the Nifty 200, based on ‘Jensen’s Alpha’. Jensen's alpha is used to evaluate the performance of an index or portfolio relative to a benchmark index. The weight of stocks in the index is determined by their alpha scores. The index has declined by 27.4% over the last year. Consumer services hold the highest weightage(16%) among sectoral weights, followed by capital durables (14.5%) and financial services (13.8%). Within the Nifty200 Alpha 30 index, IRFC, Zydus Lifesciences, and Bajaj Auto were among the worst performers, with a fall of 11.8%, 8.1%, and 9.4%, respectively.
The index’s underperformance was mainly due to the weak performance of its heavyweight sectors. Consumer Durables, which hold a significant weight in the index, struggled due to slower-than-expected economic growth in India. A weaker expansion in manufacturing and consumption, along with reduced government spending, pressured discretionary sectors.
The Nifty Media index has declined by 20% over the past year. The beleaguered Zee Entertainment Enterprises (which saw the collapse of its $10 billion merger with Sony, and a $940 million legal dispute with Star India over the termination of a cricket broadcasting deal) holds the highest weight of 25.2% in the index and has fallen by 28.1%. PVR INOX has declined 28.3%, and Network18 Media has dropped 52.5% over the same period.
Media companies have faced margin pressure due to rising operating, production, and marketing costs.
