Stock market at new all-time high after 14 months: Which sectors outperformed, underperformed?
November 27, 2025
Banking stocks, in general, have benefited from the Reserve Bank of India (RBI) reducing its policy repo rate by 100 basis points (bps) so far in 2025, with economists of the view that the central bank’s Monetary Policy Committee (MPC) may cut the key interest rate again on December 5.
On Thursday, the Sensex gained as much as 446.35 points or 0.5 per cent intraday to 86055.86 points, breaching the previous record set on September 27, 2024. However, the index ended the day almost flat at 85720.38 points as investors booked some profits.
The positive momentum in Indian stocks comes after they emerged relatively unscathed from the challenges faced over the last year or so. These ranged from concerns regarding expensive stock valuations and a slowdown in earnings as well as the US’ tariff war that began in April this year. While worries about valuations being pricey remain, the recent positivity comes on the back of a pickup in corporate earnings growth in the July-September quarter and hopes of more in the future. It is in this context that market participants are viewing these slightly expensive valuations.
Growth in corporate earnings is among the main reasons that explain how a stock is priced. If a company’s earnings are growing faster than that of its peers, it may provide higher returns to investors, making its shares more valuable.
On the external front, while markets recovered from the knee-jerk fall after US President Donald Trump first announced that reciprocal tariffs would come into effect from April 2, a trade deal between India and the US has dragged on for several months. The stock market is already above pre-tariff levels and experts believe it might rise further when a trade deal between the two nations is eventually announced.
Financial companies outperforming
Banking and financial services stocks have by far been the biggest gainers since the previous high was reached around 14 months ago. Among these, public sector banks have generated the best returns, with the BSE PSU Bank sectoral index gaining nearly 30 per cent in that time. Over the same period, the BSE Private Banks Index has risen 9 per cent.
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Sectoral indices are a measure of a sector’s performance.
Banking stocks, in general, have benefited from the Reserve Bank of India (RBI) reducing its policy repo rate by 100 basis points (bps) so far in 2025, with economists of the view that the central bank’s Monetary Policy Committee (MPC) may cut the key interest rate again on December 5.
The policy repo rate helps determine the cost of borrowing for companies and individuals, which can spur economic growth in the country. While a cut in the repo rate reduces the interest banks receive on the loans they make, it can also encourage higher loan growth, which helps earn banks more interest income. Interest rates on deposits, which are a cost for banks, can also come down when policy rates fall.
Big names such as ICICI Bank, HDFC Bank, Axis Bank, and State Bank of India have delivered a 7-17 per cent return over the past year. Meanwhile, share prices of smaller PSU banks such as IDBI Bank, Indian Bank, and Bank of India have surged 33-55 per cent. These stocks have outpaced those of private banks due to their relatively cheaper valuations. This gives more room for the stock’s price to grow, according to various research firms.
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The broader financial services sector, which also includes insurance, mutual funds, and asset management companies, has also delivered robust returns. Big players in the sector such as Shriram Finance, HDFC AMC, Bajaj Finance, and Bajaj Finserv have provided returns of 26-54 per cent.
Power, IT lag
On the other hand, power and infrastructure companies’ stocks have been the biggest underperformers. The BSE Utilities index has fallen 23 per cent, with major index constituents such as JSW Energy, Suzlon Energy, Power Grid Corporation of India, and NTPC down 11-28 per cent. The sector has struggled due to weaker-than-expected power demand and operational inefficiencies, as per analysts.
Other sectoral indices which have performed poorly since September 2024 include Nifty Realty (down 19 per cent), Nifty Oil & Gas Index (down 10 per cent), and Nifty IT (down 15 per cent).
While real estate stocks have declined after they were deemed expensive by analysts last year, these companies have also had to contend with weakening demand for affordable homes in certain markets. For the oil and gas sector, 2025 has been a year of uncertainties due to geopolitical conflicts, with crude prices surging in the first half to over $75 per barrel before they softened.
Story continues below this ad
The US’ reciprocal tariffs have been a thorn in the side of the IT sector. Major US companies, which form the majority of the client base of Indian IT firms, delayed their spending on IT services due to the threat of a rise in inflation potentially caused by the sweeping tariffs.
The positive momentum in Indian stocks comes after they emerged relatively unscathed from the challenges faced over the last year or so. These ranged from concerns regarding expensive stock valuations and a slowdown in earnings as well as the US’ tariff war that began in April this year. While worries about valuations being pricey remain, the recent positivity comes on the back of a pickup in corporate earnings growth in the July-September quarter and hopes of more in the future. It is in this context that market participants are viewing these slightly expensive valuations.
Growth in corporate earnings is among the main reasons that explain how a stock is priced. If a company’s earnings are growing faster than that of its peers, it may provide higher returns to investors, making its shares more valuable.
On the external front, while markets recovered from the knee-jerk fall after US President Donald Trump first announced that reciprocal tariffs would come into effect from April 2, a trade deal between India and the US has dragged on for several months. The stock market is already above pre-tariff levels and experts believe it might rise further when a trade deal between the two nations is eventually announced.
Financial companies outperforming
Banking and financial services stocks have by far been the biggest gainers since the previous high was reached around 14 months ago. Among these, public sector banks have generated the best returns, with the BSE PSU Bank sectoral index gaining nearly 30 per cent in that time. Over the same period, the BSE Private Banks Index has risen 9 per cent.
Story continues below this ad
Sectoral indices are a measure of a sector’s performance.
Banking stocks, in general, have benefited from the Reserve Bank of India (RBI) reducing its policy repo rate by 100 basis points (bps) so far in 2025, with economists of the view that the central bank’s Monetary Policy Committee (MPC) may cut the key interest rate again on December 5.
The policy repo rate helps determine the cost of borrowing for companies and individuals, which can spur economic growth in the country. While a cut in the repo rate reduces the interest banks receive on the loans they make, it can also encourage higher loan growth, which helps earn banks more interest income. Interest rates on deposits, which are a cost for banks, can also come down when policy rates fall.
Big names such as ICICI Bank, HDFC Bank, Axis Bank, and State Bank of India have delivered a 7-17 per cent return over the past year. Meanwhile, share prices of smaller PSU banks such as IDBI Bank, Indian Bank, and Bank of India have surged 33-55 per cent. These stocks have outpaced those of private banks due to their relatively cheaper valuations. This gives more room for the stock’s price to grow, according to various research firms.
Story continues below this ad
The broader financial services sector, which also includes insurance, mutual funds, and asset management companies, has also delivered robust returns. Big players in the sector such as Shriram Finance, HDFC AMC, Bajaj Finance, and Bajaj Finserv have provided returns of 26-54 per cent.
Power, IT lag
On the other hand, power and infrastructure companies’ stocks have been the biggest underperformers. The BSE Utilities index has fallen 23 per cent, with major index constituents such as JSW Energy, Suzlon Energy, Power Grid Corporation of India, and NTPC down 11-28 per cent. The sector has struggled due to weaker-than-expected power demand and operational inefficiencies, as per analysts.
Other sectoral indices which have performed poorly since September 2024 include Nifty Realty (down 19 per cent), Nifty Oil & Gas Index (down 10 per cent), and Nifty IT (down 15 per cent).
While real estate stocks have declined after they were deemed expensive by analysts last year, these companies have also had to contend with weakening demand for affordable homes in certain markets. For the oil and gas sector, 2025 has been a year of uncertainties due to geopolitical conflicts, with crude prices surging in the first half to over $75 per barrel before they softened.
Story continues below this ad
The US’ reciprocal tariffs have been a thorn in the side of the IT sector. Major US companies, which form the majority of the client base of Indian IT firms, delayed their spending on IT services due to the threat of a rise in inflation potentially caused by the sweeping tariffs.