Dalal Street investors became richer by ₹30.20 lakh crore in 2025, helped by over 8% surge in the BSE benchmark Sensex, despite facing multiple headwinds including foreign fund exodus, tariff-related uncertainties, elevated valuations and a weakening rupee. The markets demonstrated remarkable resilience, supported by strong domestic investor participation and macroeconomic stability marked by robust GDP growth.

Sensex Performance and Market Capitalization

The market performance data reveals the strength of Indian equities throughout 2025:

The market capitalization of BSE-listed companies reached the coveted ₹400-lakh crore mark for the first time in April, highlighting the sustained growth trajectory of Indian markets.

Year of Consolidation and Transition

Industry experts characterized 2025 as a consolidation year for Indian equities. After several years of strong double-digit returns, benchmark indices delivered more moderate gains of 8-10%. "While these returns may appear modest compared to previous years, they came amid global headwinds, foreign fund outflows, and valuation corrections," noted Ponmudi R, CEO of Enrich Money.

Domestic markets grappled with muted corporate earnings growth, elevated valuations, a weakening rupee, and persistent Foreign Institutional Investor (FII) outflows. These factors kept sentiment cautious despite a stable macro backdrop, according to Santosh Meena, Head of Research at Swastika Investmart.

Foreign Fund Outflows and Global Challenges

The year witnessed record foreign investor outflows, creating significant headwinds for market performance:

Globally, markets were influenced by geopolitical tensions, tariff-related uncertainties, and evolving US Federal Reserve interest rate expectations, adding to the complexity of market dynamics.

Record IPO Activity Supports Markets

A record number of initial public offerings provided significant support to market performance in 2025. The largest main-board IPOs demonstrated strong investor appetite:

This robust IPO activity reflected continued confidence in Indian market fundamentals and provided additional liquidity support.

Domestic Support Drives Resilience

"Despite outflows continuing to be an issue for foreign investors, the resilience of the market was demonstrated. One of the key drivers for the Indian market in 2025 has been the presence of robust domestic investor support," said Nitin Rao, CEO of InCred Wealth. Consistent SIP inflows, increased retail participation, and confidence in the long-term growth story provided stability during periods of global volatility.

The top five companies by market capitalization reflect the strength of Indian corporate leaders:

Historical Context and Market Evolution

Comparing 2025 performance with previous years shows the evolution of market dynamics:

Sunny Agrawal, Head of Fundamental Research at SBI Securities, explained: "Against the backdrop of healthy returns during 2020-2024 period, 2025 has turned out to be a year of consolidation and mean reversion. Some pockets of markets were trading at an expensive valuation and this coupled with earnings slowdown with increasing global uncertainties led to correction in the market during the first quarter of 2025 followed by gradual recovery since April across large caps."

Three years ago, few would have wagered on Asia's oldest stock exchange pulling off one of the most dramatic turnarounds in India's capital markets. Yet since Sundararaman Ramamurthy took charge as managing director and chief executive officer of BSE in January 2023, the exchange's shares have delivered over 14 times return, minting extraordinary wealth for shareholders.

Strategic Foundation: Cost Optimization and Organizational Restructuring

When Ramamurthy assumed charge, revenue growth was challenging and operational inefficiencies had accumulated over time. Rather than chasing topline expansion immediately, his first focus was on fixing the foundation. "When you come in, you are typically looking to boost your revenue and bottom line," Ramamurthy explained. "Topline increase was looking very difficult and so I did a cost-cutting exercise of ₹100 crore."

The comprehensive clean-up targeted revenue leakages, including barter schemes, and freed up capital to rebuild the organization. The restructuring involved filling vacancies, rationalizing pay scales, restoring appraisal cycles, and re-energizing senior leadership.

Technology Infrastructure and Customer Engagement

Equally critical was a sharp pivot towards customer engagement. In his first three months, Ramamurthy met nearly 350 brokers, asking what he described as a single question posed "with folded hands": what would make them trade more on BSE.

The feedback shaped BSE's operational and technology roadmap comprehensively:

The objective was to remove technology latency as a competitive handicap and rebuild broker confidence in the platform.

The Derivatives Revolution: Sensex Weekly Options

The real inflection came in May 2023 with the relaunch of equity derivative contracts. Until then, BSE was non-existent in index options while NSE dominated the space. The relaunch marked a deliberate push to reposition options trading as the exchange's primary growth engine.

Sensex weekly options emerged as the flagship product, supported by new contracts such as Bankex, frequent recalibration of expiry days, and a focus on deepening liquidity beyond expiry sessions. The results have been remarkable:

Financial Performance and Projections

The financial operating leverage has been significant. According to Jefferies projections, BSE's transformation is reflected in impressive growth metrics:

Jefferies projects a 28% compound annual growth rate in operating revenue over FY26–28, driven by rising option market share and expanded co-location capacity. Transaction charges now account for nearly 60% of operating revenue, after growing eightfold between FY23 and FY25.

Institutional Interest and Infrastructure Expansion

Institutional ownership has followed performance trajectory closely:

Technology investments have accompanied capacity expansion. BSE has more than doubled its co-location racks over the past year and plans to add another 70–90 by the end of FY26, taking total capacity to around 500 racks. Increased utilization of these racks is expected to be a key earnings driver.

Leadership Perspective and Future Outlook

For Ramamurthy, the success of Sensex derivatives extends beyond headline market share to ecosystem depth. "For me, the tracking element is not market share," he explained. "The more important parameters are how many brokers, foreign institutional investors and clients are trading with me."

Ramamurthy credited regulatory support as crucial to the turnaround. "Support from regulators has been immense," he said, calling it one of the key enablers of the exchange's revival.

Brokerages see further growth levers opening up, with expectations of incremental contributions from the co-location business, the clearing corporation, and the Star MF platform to support earnings beyond derivatives. However, sustainability considerations remain as Sensex weekly options scale toward sizes comparable with Nifty contracts.

With transaction-led revenues accelerating, margins expanding, and new growth engines emerging, BSE's resurgence under Ramamurthy stands out as one of India's most compelling market turnarounds, rewarding investors who backed the transformation story.