In 2025, the Indian stock market experienced extreme volatility with historic crashes and strong comebacks. The Sensex saw its worst one-day fall in two decades in June, followed by a prolonged correction.
If 2025 taught investors one lesson, it was "brace for anything". The Indian stock market swung between fear and euphoria, delivering historic crashes, sudden recoveries and surprise policy moves that kept traders on edge throughout the year. From panic-driven sell-offs to powerful rallies, here's how the year unfolded on Dalal Street.
June Shock: Sensex Sees Its Worst One-Day Fall in Two Decades
The year's most dramatic moment came on June 4, when the Sensex crashed 5,931 points, a staggering 8.5 per cent, marking its worst single-day fall since 2004. The Nifty wasn't spared either, sliding 6.5 per cent in one brutal session.
Foreign investors rushed for the exit, dumping mid, and small, cap stocks as global cues turned shaky. Screens turned red within minutes, and billions in investor wealth were wiped out in a matter of hours.
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A Slow Bleed: Markets Slide for Months After Hitting Peak
The pain didn't stop with one bad day. From its September 2024 peak to the March 2025 bottom, the Sensex slipped nearly 12 per cent, losing more than 10,000 points. The Nifty fell close to 13 per cent during this prolonged correction.
Foreign institutional investors sold Rs 2.18 lakh crore worth of equities, while domestic mutual funds could only partly absorb the pressure. For many investors, this phase felt less like a crash and more like a test of patience.
August Jolt: Flash Crash Spooks Investors Again
Just when nerves were settling, markets were hit by another sudden scare on August 26. The Sensex fell nearly 800 points intraday to close at 80,854, while the Nifty slipped below the key 24,750 level.
Global volatility and renewed foreign selling sparked panic, with mid-cap and small-cap stocks tumbling 3–5 per cent. The speed of the fall reminded investors how quickly sentiment can turn.
Foreign Money Leaves, Indian Savings Step In
One of the defining themes of 2025 was the battle between foreign and domestic investors. FIIs pulled out a record Rs 2.18 lakh crore, citing expensive valuations and global uncertainty.
At the same time, domestic institutional investors, led by mutual funds, stepped up, buying Rs 3.5 lakh crore worth of stocks. Their steady participation played a crucial role in preventing deeper damage during volatile periods.
Budget Cheer: July Turns Out to Be a Game-Changer
After months of uncertainty, July brought relief. The Union Budget 2025 sparked a powerful rally, with the Nifty surging 15 per cent and the Sensex climbing 12 per cent in a single month.
Infrastructure-focused spending and tax relief measures lifted sentiment. PSU banks jumped nearly 25 per cent, while defence stocks soared around 30 per cent, making July the strongest month of the year.
October Surprise: RBI Rate Cut Fuels Sharp Rally
In October, the Reserve Bank of India caught markets off guard with a 50-basis-point cut in the repo rate. The surprise move triggered a sharp two-day rally.
The Nifty gained 4.2 per cent, Bank Nifty jumped 8.5 per cent, and rate-sensitive sectors like banking, realty and autos rallied 10–12 per cent. Falling bond yields added further support to equity valuations.
Foreign Investors Return, Briefly but Powerfully
After seven straight months of selling, FIIs made a dramatic comeback in November, buying Rs 45,000 crore worth of Indian stocks in just one week.
Backed by another Rs 25,000 crore of buying from domestic mutual funds, the sudden inflows lifted mid- and small-cap stocks by 5–7 per cent and added nearly Rs 15 lakh crore to market capitalisation in days.
PSU Banks Struggle While Others Recover
Not all sectors enjoyed the recovery. Public sector bank stocks went through a rough patch, with the Nifty PSU Bank index crashing 25 per cent from its July peak to October lows.
Concerns over asset quality dragged stocks like SBI and PNB lower, while private banks clearly outperformed during this phase.
Year-End Recovery Restores Some Calm
From the November lows, markets staged another comeback. The Sensex rose more than 5,000 points, while the Nifty gained about 8 per cent by mid-December.
IT stocks led the charge, with TCS and Infosys together adding nearly Rs 60,000 crore in market value. Monthly SIP inflows hit a record Rs 25,000 crore.
