The Nifty 50 emerged as the top performer among all major indices on the National Stock Exchange (NSE) in 2025, delivering a solid 10.50% return according to official NSE data. The benchmark index climbed from 23,645 on December 31, 2024, to 26,130 by December 31, 2025, adding 2,485 points during the period.

Despite this strong performance, Indian markets faced significant headwinds throughout the year, including currency depreciation and challenging global conditions that impacted overall investor sentiment.

Index Performance Analysis

The NSE performance data reveals a clear divergence between large-cap and small-cap segments during 2025. While the Nifty 50 led the charge, broader market indices showed more modest gains.

The small-cap segment notably underperformed, with the Nifty Smallcap 250 declining 6.00% during the year, falling 1,068 points from its December 2024 levels. This divergence highlighted the preference for quality large-cap stocks amid market uncertainty.

Currency Impact on Returns

Currency movements significantly affected dollar-denominated returns for international investors. The Nifty 50 USD gained 5.30%, rising from 9,570 to 10,081, reflecting the impact of rupee depreciation on foreign investor returns.

The Indian rupee weakened by 5.00% against the dollar during the year, while the Dollar Index itself declined sharply by 9.40%, reflecting broader global currency dynamics.

Market Capitalization Growth

Despite various challenges, the overall market capitalization of NSE-listed companies expanded significantly during 2025. Total market cap rose from ₹439 lakh crore at the end of December 2024 to ₹474 lakh crore by December 31, 2025, marking a healthy 7.90% increase.

However, the market capitalization to GDP ratio moderated from 138% to 135%, indicating a decline of 279 basis points, suggesting some normalization in market valuations relative to economic output.

Sector and Final Session Performance

The year concluded on a strong note, with the final trading session showing robust recovery momentum. The BSE Sensex climbed over 545 points to end at 85,220.60, while the Nifty 50 advanced nearly 191 points, snapping multiple sessions of losses.

Metal stocks led the year-end rally following the government's decision to impose a three-year safeguard duty on select steel imports. Public sector banks and metals emerged as the clear winners for the full year, delivering strong returns despite overall market challenges.

Investment Flows and Market Outlook

The year witnessed contrasting flow patterns that shaped market dynamics. Foreign portfolio investors recorded outflows of $34.00 billion, while domestic investors provided stability through systematic investment plan inflows averaging $3.00 billion monthly.

As markets head into 2026, the Nifty 50's outperformance among NSE indices demonstrates the resilience of India's large-cap segment. Analysts expect investor sentiment to hinge on corporate earnings recovery and potential improvements in domestic demand conditions, with the benchmark index well-positioned for continued leadership among major market indices.

The Nifty 50 index concluded the final monthly expiry of the year on a flat note, closing marginally lower by 3.25 points at 25,938.85 points. The benchmark index experienced a range-bound session characterized by a "tug of war" between bulls and bears, with global holidays and New Year's Eve anticipation keeping investors largely on the sidelines.

Year-End Expiry Patterns and Market Dynamics

The final monthly expiry session reflected typical year-end market behavior, with reduced participation and sideways movement dominating trading patterns. Siddhartha Khemka, head of research at Motilal Oswal Financial Services, attributed the subdued activity to global holidays and anticipation surrounding New Year's Eve celebrations.

The broader market faced slight pressure during the session, with both midcap and smallcap indices declining. However, selective sectoral strength in Metal and Auto segments provided cushion against foreign institutional investor selling and year-end lethargy.

Technical Analysis and Candlestick Patterns

The Nifty formed significant technical patterns during the session, creating a "bullish pinbar" and "Doji" candlestick formation on daily charts. These patterns reflect market indecision following a four-session decline and suggest potential for directional clarity in upcoming sessions.

Osho Krishan, chief manager of technical and derivative research at Angel One, highlighted that the index is currently positioned between its 20-day and 50-day exponential moving averages, creating a neutral technical setup.

Strategic Outlook and Trading Recommendations

Analysts recommend maintaining a cautious approach with light directional bets given the current market structure. Angel One identifies significant resistance between 26,100 and 26,150, while Bajaj Broking Research emphasizes that a decisive breakout above 26,300 is essential to trigger upside momentum toward 26,500.

The immediate support zone is positioned at 25,900 to 25,850, with Bajaj Broking pointing to 25,700 to 25,800 as the critical floor that must be maintained to preserve a neutral-to-positive market outlook.

Sectoral Performance and Bank Nifty Strength

In contrast to the headline index's flat performance, Bank Nifty demonstrated relative strength by forming a "bullish engulfing" candlestick pattern, indicating strong buying interest at lower levels. The Nifty Metal index emerged as the session's standout performer, surging 2.00% to achieve a fresh all-time high of 11,029 points.

Bajaj Broking expects Bank Nifty to establish a base within the 58,500-60,100 range, with immediate resistance at 59,300 to 59,500. A breakout above 59,500 could facilitate movement toward the recent all-time high of 60,100.

Market Outlook for Final Trading Day

Looking ahead to the final trading day of the year, market participants will closely monitor the US FOMC meeting minutes and domestic pre-quarterly business updates for directional cues. Siddhartha Khemka expects markets to remain in sideways mode, while Osho Krishan advises focusing on selective thematic players for potential outperformance opportunities.