Profitable decade: NIFTY50 maintains winning streak for 10th year in 2025; top 5 factors

NIFTY50 is on the verge of making a new feat by holding the record run for the 10th consecutive year. Though it didn't feel as exciting as the previous four years since the COVID-19 crash, as broader markets posted a lackluster performance, especially in the small-cap category. However, the benchmark NIFTY50 maintained its winning streak and delivered steady returns. With the winning streak, NIFTY50 delivered 12.64% CAGR returns in 10 years, outperforming its Asian peers like Nikkei (+10%), Dow Jones (+10.7%), UK's FTSE (+4.7%) only underperforming Nasdaq at 16.6% CAGR for the same period.

Markets were primarily influenced by global triggers like tariffs, trade wars and border tensions in May 2025. However, the positive triggers outweighed the worries, leading to a steady rally towards the record high levels.

Budget reforms

The 2025 budget came in as a strong relief to consumers and investors, as Finance Minister Nirmala Sitharaman announced major tax cuts during the budget. The new tax bill included no tax on income up to ₹12 lakh to boost consumption. Additionally, the government also increased the capex budget by 20%, aiming to accelerate the growth engine in the economy. The first full-year budget by the NDA government in its third term alleviated worries of consumers and investors over growth and prosperity.

Favourable monsoon

The 2025 monsoon remain above normal throughout the season, with a strong kharif season, with a 15% YoY jump in paddy and pulses crops this year. It helped in reducing the inflation levels to below 2% in the July CPI print. A favourable monsoon kept the rural demand for automobiles, consumer durable goods strong. Key FMCG companies reported strong volume growth in rural areas due to favourable monsoon conditions. Similarly, the entry-level bikes saw an 18-20% YoY jump in registrations from the rural areas. In addition, tractor and farm equipment manufacturers also witnessed strong growth across the board.

GST rationalisation boost

After the tax cut at the individual level, the government of India announced another major reform to promote exploding hyper consumerism in the country through GST rate cuts. Prime Minister Modi introduced major changes in the GST reforms before the festive season, which were formally announced by the Finance Minister later in September. The GST on major products were brought down from 28% to 18%, 12% and 5% categories. Following the announcements, markets regained momentum and bounced back from lower levels. NIFTY 50 surged 4.5% in October 2025 following the implementation of the new GST reforms from 22nd September 2025.

Favourable monetary policy

As the government unleashed major reforms, the central bank also announced a host of monetary policy decisions, supporting the broader growth outlook for the economy. In 2025, RBI changed its stance from being accommodative to neutral as inflation came under control and growth became the primary focus for the policymakers. RBI announced four rate cuts in 2025, bringing the base rate from 6.25% to 5.25% as of December’s policy. Following the rate cut, the credit growth regained its double-digit growth rate in November at 11% after falling to 9% in June 2025.

Steady earnings

The Q2FY26 earnings concluded with strong growth across sectors due to the monsoon boost, and GST 2.0 gave a boost to the FMCG and the automobile sector earnings. FMCG companies in particular witnessed green shoots of revived consumption growth in the urban segment, which led to overall volume growth of 8-10%. Similarly, the automotive sector also showed great improvement in volumes, owing to sectoral tailwinds benefiting the companies. Together, these two sectors, along with Finance and banking, boosted the earnings growth for NIFTY50.

Key risks to the rally

As NIFTY50 trades with double-digit gains in 2025 at 10.5% till date, awaiting to close the year with new record highs, key headwinds continue to hold back the NIFTY50 from making new highs. A favourable trade deal with the US remains a key long-standing overhang on the markets, along with FII exodus from the markets. Experts believe that a favourable deal with the US could spur the much-needed momentum in the markets. Additionally, as India remains a major economic powerhouse with the fastest GDP growth amongst major nations, India could soon return as a major attraction for investments for FIIs amid overvaluation concerns in the developed markets.