The Indian stock market achieved a significant milestone on Thursday, November 27, 2025, scaling to a fresh all-time high after a prolonged gap of 14 months. Both the benchmark indices, Nifty 50 and Sensex, surged past their previous records established in September 2024, driven by multiple favorable factors including declining global crude oil prices, expectations of an interest rate reduction by the US Federal Reserve, and renewed buying activity from foreign investors.
Market Performance and Key Drivers
During Thursday's trading session, the Sensex climbed as much as 446.35 points, or 0.5 percent, intraday to reach 86,055.86 points, successfully breaking its prior peak. However, the index concluded the day nearly flat at 85,720.38 points as some investors opted to secure profits. This remarkable upward movement reflects the market's resilience despite facing numerous challenges over the past year, such as concerns over expensive stock valuations, an earnings slowdown, and the US tariff war that commenced in April 2025.
The recent optimism stems from a noticeable pickup in corporate earnings growth during the July-September quarter and anticipations of continued improvement. Market participants are now viewing the somewhat elevated valuations through the lens of this earnings recovery. On the external front, while markets initially experienced a knee-jerk reaction to US tariff announcements, they have since recovered beyond pre-tariff levels. Experts suggest that a finalized trade deal between India and the US could provide further impetus for market growth.
Outperforming Sectors: Banking and Financial Services Lead the Charge
Banking and financial services stocks have emerged as the standout performers since the last market high approximately 14 months ago. Public sector banks have delivered exceptional returns, with the BSE PSU Bank sectoral index soaring nearly 30 percent during this period. In comparison, the BSE Private Banks Index registered a 9 percent gain.
The banking sector's robust performance can be largely attributed to the Reserve Bank of India's (RBI) cumulative repo rate cut of 100 basis points in 2025. Market observers anticipate another potential rate reduction when the Monetary Policy Committee (MPC) meets on December 5. While lower policy rates compress the interest income banks earn from loans, they simultaneously stimulate higher loan growth, ultimately boosting interest income. Additionally, reduced deposit rates, which represent a cost for banks, can improve their net interest margins.
Prominent private lenders including ICICI Bank, HDFC Bank, Axis Bank, and State Bank of India generated returns between 7 and 17 percent over the past year. Smaller PSU banks such as IDBI Bank, Indian Bank, and Bank of India witnessed even more dramatic surges, with their share prices skyrocketing between 33 and 55 percent. Research firms attribute this outperformance to their relatively cheaper valuations, which offered greater room for price appreciation.
The broader financial services sector, encompassing insurance, mutual funds, and asset management companies, also posted impressive gains. Major players like Shriram Finance, HDFC AMC, Bajaj Finance, and Bajaj Finserv delivered returns ranging from 26 to 54 percent.
Underperforming Sectors: Power, IT, and Realty Struggle
Conversely, power and infrastructure companies faced significant headwinds, becoming the market's biggest laggards. The BSE Utilities index plummeted 23 percent, with major constituents such as JSW Energy, Suzlon Energy, Power Grid Corporation of India, and NTPC declining between 11 and 28 percent. Analysts cite weaker-than-expected power demand and operational inefficiencies as primary reasons for the sector's struggles.
Other sectoral indices that delivered disappointing performances since September 2024 include Nifty Realty (down 19 percent), Nifty Oil & Gas Index (down 10 percent), and Nifty IT (down 15 percent). Real estate stocks declined after being deemed overvalued by analysts last year, compounded by weakening demand for affordable housing in certain markets.
The oil and gas sector navigated a year of uncertainties in 2025, characterized by geopolitical conflicts that initially pushed crude prices above $75 per barrel before they moderated. The IT sector faced particular challenges from the US reciprocal tariffs, which prompted major US companies—the primary clients of Indian IT firms—to delay their IT services spending due to inflation concerns stemming from the tariff implementation.
