April 2025 – How sectors fared on returns, risk, and valuations

7 May 2025 , 10:59 AM

STOCK MARKET BIG PICTURE FOR APRIL 2025

How did the Indian stock markets perform in April 2025, in terms of generic, sectoral, and thematic indices? Here is a quick dekko.

1. Let us start with generic indices for April 2025. In this case, the 1-month returns were positive across all generic indices. The Nifty closed April 2025 with gains of 3.48%. The Nifty Midcap-50 was the star among generic indices gaining 5.18% in April 2025. Among smaller indices, mid-cap 100 index gained 4.76%, Mid-Cap Select gained 4.58%, while small cap returns were relatively subdued in April 2025.
2. What about thematic indices in April 2025? Amidst a slew of fresh orders, the Rafale deal, and the tensions on the Indo-Pak border; the Nifty India Defence gained 11.51%. Nifty Capital Markets was another star performer at 9.37%. Other star performers included SME Index and the Transport & Logistics index. Among the business groups, Tata group stocks came under pressure and gave negative returns in April 2025.
3. Let us turn to strategy indices in April 2025? With the theme shifting on a different plane from global plays to domestic plays, the various strategy indices were relatively neutral. Among the better performing strategies; Low Volatility 50 generated 4.51%, Alpha Low Volatility 4.37%, and Quality Low Volatility generated 4.16%. The focus was on stability.

Let us turn specifically to the sectoral indices and how they have performed in terms of returns, risk, and how they fare on valuations.

HOW SECTORAL INDICES FARED ON RETURNS IN LAST 1 YEAR?

The table captures the returns on key sectors with ranking on 1-year returns.

Sectoral Index	1-Year Returns	3-Year Returns	5-Year Returns
Nifty Financial Services	20.77	17.32	20.70
Nifty Healthcare Index	18.03	19.48	21.13
Nifty non-Banks	16.17	20.30	23.65
Nifty Pharma	15.53	18.28	19.30
Nifty Private Bank	12.77	15.26	19.10
Nifty Bank	12.51	16.12	21.37
Nifty IT	10.37	6.38	22.83
Nifty Consumer Durables	7.53	11.00	23.28
Nifty FMCG	6.07	15.89	16.61
Nifty Auto	-0.02	27.32	31.58
Nifty Oil & Gas	-4.53	11.94	22.23
Nifty Metal	-5.81	11.87	37.70
Nifty Realty	-8.73	26.33	36.86
Nifty PSU Bank	-13.36	35.05	38.73
Nifty Media	-19.50	-10.51	6.08

Data Source: NSE Indices

There are some interesting takeaways on 1 year returns.

• Like in February and March, BFSI led 1-year returns in April also. Nifty Financial Services Index leads with 20.777% returns in last one year; followed by Healthcare at 18.03% and NBFCs at 16.17%. Six out fifteen sectors gave negative returns; with the worst being Media -19.50% and PSU banks -13.36%. Globally vulnerable sectors have suffered in the last two quarters. On a 5-year basis, all sectors have given positive CAGR returns.
• Out of the 15 sectors, 9 sectors gave positive returns in last 1 year,  while 6 gave negative returns. The 15 sectors gave average returns of 4.52% in last 1 year. While the top-5 sectors gave 16.65%, bottom 5 gave -10.39%. Media is the only sector to yield negative returns even over 3-years.

HOW SECTORAL INDICES FARED ON RISK IN LAST 1 YEAR?

Returns are one side of the coin. Here is a look at the risk perspective.

Sectoral Index	1-Year Volatility	1-Year Beta	1-Year Correlation	1-Year R2
Nifty Realty	31.00	1.49	0.72	0.52
Nifty PSU Bank	29.83	1.48	0.74	0.55
Nifty Media	28.00	1.10	0.59	0.35
Nifty Metal	27.75	1.43	0.77	0.60
Nifty Oil & Gas	24.94	1.34	0.81	0.65
Nifty non-Banks	22.23	1.26	0.85	0.72
Nifty IT	21.64	0.82	0.57	0.32
Nifty Auto	21.03	1.11	0.79	0.63
Nifty Consumer Durables	19.82	0.93	0.70	0.49
Nifty Financial Services	17.99	1.06	0.88	0.78
Nifty Bank	17.83	1.04	0.87	0.76
Nifty Private Bank	17.77	1.00	0.85	0.72
Nifty Pharma	17.52	0.68	0.58	0.34
Nifty Healthcare Index	16.82	0.67	0.60	0.36
Nifty FMCG	14.92	0.46	0.46	0.21

Data Source: NSE Indices

The above table is ranked on 1-year volatility (standard deviation) starting with the most volatile sectors to the least volatile sectors. 

• In terms of standard deviation of returns; Realty, PSU banks, metals, and oil & gas remain most volatile, despite pressure in recent months. Over a longer timeframe higher volatility has been compensated by higher returns over 3 and 5 year horizons. Healthcare remains the only sector to give top class returns despite low volatility.
• The 15 sectors had average volatility of 21.94% and average beta of 1.06, which approximately reflects Nifty. A total of 10 of the 15 sectors were aggressive with beta of more than 1. FMCG, IT and Pharma still are the best portfolio diversification bets, due to low correlation with Nifty.

SECTORAL INDICES AND THE VALUATION PLAY IN LAST 1 YEAR

Finally, we look at sectoral valuations ranked on P/E ratios as of April 2025.

Sectoral Index	Price/Earnings (P/E Ratio)	Price / Book (P/BV)	Dividend Yield
Nifty Consumer Durables	74.39	15.06	0.38
Nifty FMCG	44.93	10.80	1.95
Nifty Realty	42.99	5.12	0.41
Nifty Healthcare Index	38.47	6.03	0.52
Nifty Pharma	32.82	5.34	0.64
Nifty IT	26.85	7.41	3.02
Nifty non-Banks	22.98	3.55	0.85
Nifty Auto	21.82	4.72	0.91
Nifty Metal	19.93	2.49	2.42
Nifty Financial Services	17.26	3.02	0.83
Nifty Private Bank	16.41	2.39	0.55
Nifty Bank	13.97	2.35	0.95
Nifty Oil & Gas	13.39	1.67	2.75
Nifty PSU Bank	6.92	1.27	2.26
Nifty Media	0.00	1.23	1.04

Data Source: NSE Indices

Here are key takeaways from the three valuation parameters. 

• Consumer durables, FMCG, and Realty are still having the richest valuations. Post tariffs, there is a shift to domestic plays like FMCG and Consumer durables, so valuations may only get steeper. The sharp correction has made many sectors attractive in dividend yield terms. For instance, IT at 3.02%, Oil & Gas at 2.75%, Metals at 2.42%, PSU Banks at 2.26%, and FMCG at 1.95% stand out as Dividend Yield picks.
• The average P/E of all sectors stands at 26.21X, a small bounce from March. The average dividend yield looks relatively attractive at 1.30%.

Sectoral returns have shown positive traction in April 2025; although the shift is now clearly away from global plays to domestic stories.