As 2025 comes to a close, the contrasts could not be sharper. Globally, the year was shaped by tariff tensions and a slowing economy. At home, Indian markets moved away from dependence on foreign flows and toward a more domestically driven growth story. Silver touched a historic ₹1 lakh, and the continued financialisation of Indian household savings stood out as a defining shift. Together, these trends made 2025 a year when India began charting a more self-directed economic path.

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Markets Last Month 🗓️

1. The Global Stage: Yield Spikes and Trade Walls

The year began with an unusual sell-off in US Treasuries that sent shockwaves through global markets. As yields on the 10-year Treasury rose above 4.5%, people started to question the traditional safe haven status of US debt for the first time in decades. 

By mid-year, the global focus shifted from interest rates to trade barriers. The return of Trump’s trade policies shaped the second half of 2025. The US imposed a huge 25% tariff on Indian goods, which later effectively reached 50% for some sectors, as a punishment for India’s ongoing import of discounted Russian oil. This was followed by a 100% tariff spike on branded pharmaceutical imports, pushing Indian drugmakers to quickly shift to specialized generics and local manufacturing.

2. India’s Macro Miracle: From #5 to #4

Despite the global gloom, India reached a historic milestone by becoming the world’s 4th largest economy, surpassing Japan. This achievement was supported by strong data:

• GDP Resilience: After beginning the year at 6.5%, GDP growth jumped to an impressive 8.2% in Q2 FY26. This growth was driven by a favorable environment of high growth and declining prices.
• Sovereign Upgrade: In August, S&P Global Ratings raised India’s credit rating to BBB- for the first time in 18 years. They cited fiscal improvement and economic strength as reasons for this upgrade.
• Inflation’s Disappearing Act: By November, India saw an unusual inflation rate of nearly 0.25%. This was due to a significant drop in food prices and the success of GST 2.0 reforms, which simplified tax rates to 5% and 18%.

3. The Great Financialisation: SIPs vs. Everything

2025 will be remembered as the year when Indian retail investors acted as the market’s “Shock Absorber.” Monthly SIP contributions remained steady at around ₹30,000 crore. Domestic institutional investors (DIIs) effectively absorbed a huge ₹90,000+ crore sell-off from foreign investors earlier in the year. 

This “Financialisation of Savings” showed up in a record-breaking IPO season. In October alone, 14 mainboard listings raised over ₹46,000 crore, led by the large Tata Capital and LG Electronics India debuts. By the end of the year, 89 companies had raised more than ₹1.38 lakh crore. It was clear that Dalal Street no longer waits for a go-ahead from Wall Street.

4. Bullion’s Golden Year (and Silver’s Moment)

For the first time on record, both precious metals passed the ₹1,00,000 mark. Gold rose above ₹1,00,000 per 10 grams, while silver also exceeded ₹1,00,000 per kilogram in June. Silver’s 22% jump in just two weeks in October showed a huge supply-demand gap driven by the EV and solar sectors. 

However, the year ended with a warning from regulators. As “Digital Gold” gained popularity in fintech, SEBI raised concerns about the significant risks due to the lack of custody and purity checks on these platforms. This marked a shift in how new investment products are regulated in India.

5. Markets in Aggregate: A Year of Repricing, Not Re-rating

Equities, both in India and around the world, spent much of the year stabilizing after the significant gains of the previous cycle. Index returns were influenced more by sector rotations than by widespread increases in valuations. Rate-sensitive sectors responded directly to changes in the bond market. Export-focused industries reacted to shifts in currency and trade, while domestic themes gained from consistent household savings.

Foreign investment flows were irregular and often determined by global yield differences rather than factors specific to India. However, market stability began to grow from within, marking an important structural shift for a large emerging market.

Windmill Wisdom 🦉

The Strategies We Built in 2025
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Top Windmill Capital Reads of 2025
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Gold Didn’t Beat Stocks for 18 Years.
One exceptional year made gold look superior to stocks. But 18 years of data tells a very different story about wealth. Read report →

The Untold Story of Military Modernization
India’s defense power isn’t about tanks and jets anymore; it’s about mastering the materials and code that power them. Understand it →

Rebalance Completed 🧮

Our quant-based, asset allocation, target date and AI-based model smallcases were reviewed and updated.

• Horizon 2030 Target Date
• Horizon 2035 Target Date
• Horizon 2040 Target Date
• Horizon 2045 Target Date
• Horizon 2050 Target Date
• Horizon 2055 Target Date
• Defence Picks – AI Model
• Growth Multicap – Quant
• Quality Bluechip – Quant
• Quality Smallcap – Quant
• Growth at a fair Price – Asset Allocation Model
• GEM-Q – Asset Allocation Model
• Smallcap Quality & Growth – Asset Allocation Model
• Value & Momentum – Asset Allocation Model

Head over to the smallcase app, check out the smallcase of your choice, > Go to Stocks & Weights tab and scroll down to download the Portfolio Report to view the rationale behind the rebalance.

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