Indian Stock Markets and Rupee Recover All Losses in 2025

The Indian stock markets and the rupee have successfully recovered all their losses in 2025, as investor sentiment improved significantly. On Monday, the benchmark indices, BSE Sensex and NSE Nifty, rose by 1.4% and 1.32%, respectively, as foreign institutional investors (FIIs) turned net buyers. The rupee also extended its gains for the seventh consecutive session, appreciating by 31 paise to close at 85.67 against the US dollar, bolstered by lower global crude prices and a weakened greenback.

FIIs' return to the Indian markets after a prolonged period of selling, coupled with bargain hunting at lower levels and better valuations, has supported the rally. Additionally, the Federal Reserve’s signals of two rate cuts in 2025 have further boosted investor confidence.

On Monday, the 30-share Sensex surged by 1,078.87 points, reaching a six-week high of 77,984.38. During the day, it briefly rose 1.56% to 78,107.23. The 50-share Nifty also climbed by 307.95 points to 23,658.35, reflecting strong market momentum. In March alone, the Sensex gained 4,786.28 points, or 6.53%, and in just six trading days, it added more than Rs 27 lakh crore to investors’ wealth.

In contrast, February saw a decline of 5.55%, and January recorded a small dip of 0.81%. The recent rally has been driven by value buying, with valuations returning to long-term averages and early signs of earnings growth recovery emerging.

Vinod Nair, Head of Research at Geojit Investments Ltd., noted that increased government spending and expectations of monetary easing are likely to drive growth in rate-sensitive sectors such as banking, NBFCs, autos, consumer durables, and real estate. These sectors are expected to outperform in the near future. However, the sustainability of the rally will depend on upcoming economic data, including PMI figures and Q4 earnings.

The broader market also saw positive movement, with the BSE midcap and smallcap indices rising by 1.32% and 1.17%, respectively. All sectoral indices closed higher, with the banking sector leading the charge, up 2.53%.