As 2025 draws to a close, one exercise that everyone would be doing in the coming days is to look at how the year went by for stock markets and investors. But we bring you a slightly longer-term analysis that covers the period starting from 2020 and finds out which stocks created the most wealth, which ones grew at the fastest pace, and which companies were the most consistent performers.
The analysis shows that Bharti Airtel is the biggest wealth creator over 2020 to 2025, with Rs 7.9 trillion, followed closely by ICICI Bank with Rs 7.4 trillion. State Bank of India, Bajaj Finance, Larsen & Toubro, ITC, HCL Tech, Sun Pharma, Mahindra & Mahindra, and NTPC round up the top 10 wealth creators, according to the analysis by Motilal Oswal Financial Services Ltd.
During 2020-25, the top 100 wealth creators of India Inc created a total wealth of Rs 148 trillion. This is an all-time high for any similar period and is thanks mainly to the sharp drop in stock markets during the March 2020 Covid lockdown.
The study noted that the top 10 wealth creators, all large-cap stocks, accounted for only 31% of the total wealth created during this period, compared with the long period average of 50%. This is because there has seen a widespread rally in mid- and small-cap stocks, which are now richly valued versus large caps. But with earnings growth likely to revive, the share of large caps in wealth creation is likely to bounce back.
The analysis also showed that stock-exchange operator BSE emerged as the fastest wealth creator during 2020-25 with Total Return CAGR of 124%. It was followed by Rail Vikas Nigam, Jindal Stainless, GE Vernova T&D, Persistent Systems, Fertilizers and Chemicals Travancore Ltd, Dixon Technologies, Adani Power, Adani Enterprises, and Hitachi Energy.
The study pointed out that Rs 1 crore invested equally in 2020 in the top 10 fastest wealth creators would be worth Rs 24 crore in 2025, a CAGR return of 88% versus 24% for the Nifty Total Return Index.
Another highlight of the study was the list of most consistent wealth creators. State-run Hindustan Aeronautics topped this ranking. It outperformed the Nifty Total Return Index in all the last five years, and has the highest Total Return CAGR of 75%. Welspun and Bharat Dynamics ranked second in this list with 70% returns each. They were followed by Indian Bank, Bharat Electronics, Jindal Steel, Patanjali Foods, Cholamandalam Investments, Minda Corp, and Radico Khaitan.
Watch Out for the Bubble
But past performance doesn’t guarantee future returns. So, how does one figure out which stocks to bet on and which ones to be wary about? Well, seasoned investors use a variety of metrics and methodologies to evaluate stocks. One of the most common of those metrics is the price-to-earnings (P/E) ratio.
Simply put, the P/E ratio shows how much investors pay for per unit of a company’s earnings. A high P/E ratio signals high growth expectations but also possible overvaluation. A low P/E ratio could suggest slower growth or undervaluation.
Going by this metric alone, are Indian stocks undervalued, overvalued or fairly valued? A recent study by investment management firm Aequitas attempts to explain just that.
The study takes a view contrarian to the prevalent narrative that Indian markets are not overly expensive and that P/E ratios for the Nifty 50 and other benchmarks look reasonable relative to history and global peers.
The study shows that valuations of the Nifty 50, Nifty Midcap 150, Nifty LargeMidcap 250, and Nifty 500 indexes appear reasonable due to a handful of public-sector companies and financial services companies that have low multiples. After excluding PSUs, banks, NBFCs and insurance companies, the core corporate sector trades at 40–45x median P/E, with many companies commanding high multiples well above 50x.
In the Nifty 50, for instance, more than a third of the companies are trading above 40x earnings even though revenue and profits of more than half the companies are growing at less than 10%.
Similarly, more than 33% of midcap stocks are trading above 50x earnings, and just over 50% trade above 40x. Excluding banks, NBFCs and PSUs, this ratio moves up to about 60% trading above 40x. In the mid-cap and large-midcap segments, nearly half the stocks have negative one-year returns, even as the indices hover near their 52-week highs.
Nifty 500 valuations are also stretched, the study found. It noted that 32% of the companies excluding PSUs and financial companies have posted lower profits and 44% have profit growth below 10% or negative. It’s not surprising, then, that 44% of Nifty 500 companies have negative one-year returns while 62% have one-year returns below 10% or negative.
So, what’s the final word?
Broadly, the study concludes that valuations are indeed stretched, especially when PSUs and financials are excluded, and earnings growth does not justify such high multiples.
These data points suggest “bubble-like conditions” in Indian equities, Aequitas said. “This is not a picture of a broad, earnings-led bull market. It is a market where prices and valuations have run ahead of fundamentals.”
The Bond Conundrum
Over the past ten months, the Reserve Bank of India has cut interest rates by a cumulative 125 basis points. On paper, that is a strong easing cycle. In practice, most borrowers would tell you the relief feels modest. Loan rates have come down, but not in the clean, one-to-one way people expect when the RBI cuts rates so sharply.
There is one borrower that is not at all amused. It is the Government of India, the largest borrower in the economy.
Back in September, Finance Minister Nirmala Sitharaman publicly remarked that government borrowing costs were still high even though policy rates had fallen. She was talking about bond yields, the rates at which the government raises money from markets. Two rate cuts later, that complaint still holds.
Recent research from Emkay Global puts numbers to this discomfort. It shows that government bond yields have barely responded to the RBI’s rate cuts. In fact, this has been the weakest transmission to bond yields across all easing cycles in recent decades. The reasons are structural rather than temporary.
One big factor is supply. The central government is borrowing heavily, but state governments have stepped up borrowing even more aggressively. Together, they are flooding the bond market with paper. When supply overwhelms demand, yields stay high no matter what the policy rate does.
Another factor is global. Long-term bond yields in the US and other developed markets have remained elevated because investors are worried about fiscal deficits, high public debt, and governments leaning too heavily on central banks. Indian bonds are not immune to that mood. Foreign investors, who once acted as a stabilising force, have been cautious and selective.
Why should any of this matter to you?
First, government interest payments are funded by taxes. When a larger share of tax revenue goes into servicing debt, less money is left for roads, railways, health, education, and welfare. High bond yields quietly squeeze public spending choices.
Second, bond yields feed borrowing costs across the economy. Loans from NBFCs, for instance, are funded largely through bond markets. NBFC bonds are typically priced at a spread over the 10-year government bond yield. If that benchmark stays high, NBFC loan rates stay sticky too.
Even bank loans are not fully insulated. Many are linked to the MCLR, which reflects banks’ cost of funds. Bond yields influence those costs over time through deposit rates, wholesale funding, and investment portfolios.
What makes this cycle unusual is how dovish the RBI has been. In its December policy, it cut rates, lowered inflation forecasts, and clearly signalled openness to further easing. Under normal conditions, bond yields should have fallen decisively.
They did not. After a brief softening, yields hardened again.
That disconnect is the real story. It suggests that the bond market is no longer reacting just to near-term inflation or growth data. It is pricing deeper concerns about fiscal supply, long-term debt dynamics, and the limits of monetary policy in a world where governments are borrowing heavily, the research report said.
Rate cuts still matter, but they are no longer enough on their own. And when bond yields refuse to fall, the impact eventually reaches everyone, from the finance minister to the household borrower wondering why EMIs are not coming down faster.
The Finance Edge
While the effectiveness of the RBI’s monetary policy can be debated, what can’t be debated is the central bank shifting its stance on India’s banking sector—and the broader financial services sector—in so far as foreign investment is concerned. And this week came not one but two big-ticket transactions which prove just that.
On Wednesday, Japan’s Mizuho Securities announced buying Indian investment bank Avendus from American private equity firm KKR and the company’s co-founders. Mizuho will spend up to $523 million to buy as much as 78% stake in Avendus. Then, on Friday, Mitsubishi UFJ Financial Group (MUFG) announced a multi-billion-dollar deal to buy a 20% stake in Shriram Finance, one of India’s biggest NBFCs.
These deals can’t be seen in isolation. In fact, they are part of two trends—one, more foreign companies are buying into Indian banks and non-banking finance companies; two, a lot of these foreign investors are from Japan.
Non-Japanese investors that have invested in the sector this year include American private equity giant Blackstone and the UAE’s Emirates NBD and International Holding Company (IHC). Blackstone, the world’s largest PE firm, has bought a 10% stake in Federal Bank for $700 million. IHC, ultimately owned by Abu Dhabi’s ruling family, is buying a 43.5% stake in NBFC Sammaan Capital for $1 billion while Emirates NBD is taking a controlling stake in RBL Bank for over $3 billion.
But it’s the Japanese giants that have lit Deal Street. Apart from Mizuho and MUFG, Sumitomo Mitsui Financial Group bought 20% of Yes Bank in May for $1.6 billion and then purchased another 4.2% for over $300 million.
Last year, Mizuho had invested Rs 1,200 crore to pick up a 15% stake in the Indian non-banking unit of another Japanese lender Credit Saison. MUFG invested over $565 million in non-bank lender DMI Finance Pvt. Ltd in 2023 and 2024.
SMFG bought a 74.9% stake in the non-bank lender Fullerton India Credit Co. from Singapore’s Fullerton for $2 billion and renamed it SMFG India Credit Co. Ltd. It then bought the remaining 25.1% in 2023 and invested more money.
But why are Japanese banks investing in Indian lenders? The reason is simple actually. Japan’s population is ageing and declining, and its economy has been stagnating for many years. India, on the other hand, has a fast-expanding economy and a vast and growing population that offers plenty of opportunities to foreign investors. So, watch for many more deals in coming years.
Market Wrap
After four consecutive sessions of losses, Indian equity indices closed in the green on Friday, buoyed by US economic data that strengthened expectations of further easing by the US Federal Reserve. ICICI Prudential AMC had a stellar listing on Friday, gaining nearly 20% on debut. Meesho, another recent entrant to the market, has almost doubled from its issue price after listing at a premium of about 50%. In fact, its market capitalisation has now crossed Rs 1 trillion.
Friday’s rally, though sharp at around 0.6%, was not enough to offset losses from earlier sessions in the week. The Nifty 50 ended the week down about 0.6%, while the BSE Sensex fell around 0.5%.
Depreciation of the rupee against the dollar, despite reported RBI interventions, along with continued profit booking by foreign institutional investors, weighed on markets through the week.
Axis Bank, JSW Steel, Eternal (Zomato) and Sun Pharma were among the major laggards, while Shriram Finance, InterGlobe Aviation and Tata Consumer Products were the top gainers. A weaker rupee helped support IT stocks, amid reports of prolonged delays in H-1B visa processing.
Other Headlines
- ICICI Prudential AMC gets bids worth $33 billion for $1.2 bn IPO, becomes fourth most subscribed IPO in India
- Mattress and furniture maker Wakefit falls 9% in stock market debut
- India signs economic partnership agreement with Oman to boost bilateral trade and investment
- Parliament approves bill to increase foreign direct investment in insurance to 100% from 74% currently
- Govt reforms business visa regime to ease movement of foreign engineers; Chinese professionals to benefit
- SEBI approves changes to mutual fund fee structures, revises proposal to cap brokerage that MFs pay
- Japanese firm Mizuho to buy majority stake in Indian investment bank Avendus for up to $523 million
- Competition Commission of India reviews allegations of antitrust violations by IndiGo
- SpiceJet orders 100 blended-wing-body jets from US aviation startup Natilus
- Lok Sabha passes atomic energy bill to allow private participation in nuclear power sector
- ReNew Energy signs pact with Alphabet’s Google to develop 150-megawatt solar project in Rajasthan
- RBI allows HDFC Bank subsidiaries to buy up to 9.5% stake in IndusInd Bank
- Wholesale prices fall 0.32% year-on-year in November after 1.21% drop in October
That’s all for this week. Until next week, happy investing!
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