Sectoral Trends 2025: Where Investors Made Money And Where They Didn’t

Indian equity markets delivered a sharply polarised performance in 2025, with a handful of themes rewarding investors handsomely while others struggled to gain traction. From PSU banks and defence stocks leading the rally to IT and real estate lagging, the year underscored the importance of sector selection in a range-bound broader market.

Here's a look at the sectors where investors made money:

PSU banks emerged as the standout performer of the year. The Nifty PSU Bank index surged 31% year-to-date, comfortably outperforming the Nifty 50’s 11% gain. Stocks such as Indian Bank, Canara Bank and Bank of India led the rally, posting gains of 68%, 50% and 44%, respectively.

The rally in PSU banks was underpinned by strong growth in both credit and deposits, improving asset quality and stable margins. Structural factors also played a role, including SEBI’s amendment to Nifty Bank index rules and market expectations that the government may raise the foreign investment cap in PSU banks to 49% from the current 20%, improving long-term valuation comfort.

Defence stocks continued to excite investors, with the Nifty Defence index rising 24% so far this year. Garden Reach Shipbuilders climbed 71%, MTAR Technologies gained 56% and Bharat Electronics advanced 43%.

The sector benefited from robust order inflows, healthy orderbook-to-billing ratios and strong revenue visibility. Policy support remained a key tailwind, with the government targeting defence exports of Rs 50,000 crore by 2029 and indigenous defence production hitting record levels.

Autos were another bright spot, with the Nifty Auto index up 22% year to date. Two-wheeler manufacturers led the gains, driven by improving demand conditions. TVS Motor rose 54%, Hero MotoCorp gained 51% and Eicher Motors advanced 50%.

Supportive factors included a GST rate cut, strong wedding-season demand, improving rural consumption and better export traction. OEMs have also guided for higher single-digit volume growth in the second half and into fiscal 2027, boosting investor confidence.

On the flip side, media, real estate and IT disappointed investors. The Nifty Media index fell 19% this year, while the Nifty Realty and Nifty IT indices declined 15% and 13%, respectively.

Real estate stocks corrected sharply as growth momentum slowed. Among the worst performers were Oberoi Realty, down 39%, Anant Raj, down 33%, and Brigade Enterprises, which fell 28%. Phoenix Mills was the lone stock in the pack to end the year in the green.

The sector was hurt by a sharp drop in new launches, with launch volumes for the top 15 developers plunging 61% year-on-year. Pre-sales growth was largely driven by sustenance sales rather than fresh launches, while surging property prices weighed on affordability and volumes.

IT stocks struggled despite the ongoing enthusiasm around artificial intelligence. Oracle Financial Services fell 36%, TCS declined 24% and Wipro slipped 17%.

The sector faced multiple headwinds, including weak discretionary spending amid global macro uncertainty, slow deal conversions and pressure on margins from wage hikes and rising onsite costs. While AI investments are increasing, they remain at an early stage and have yet to translate into meaningful revenue growth.

Pharma and FMCG were among the most actively tracked sectors this year, even though performance was more mixed. In pharmaceuticals, sentiment improved after the US shelved tariffs on generic drugs and discussions around a revised US Biosecure Act resurfaced in Congress. Strong domestic demand also supported growth prospects.

FMCG stocks saw renewed interest as consumption showed signs of recovery. GST rate cuts and festive demand helped revive growth momentum, although part of the benefit was transitory. Expectations of a stronger second half kept investors engaged with the sector.