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

1 Jul 2025 , 11:20 AM

STOCK MARKET BIG PICTURE FOR JUNE 2025

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

• Let us start with generic indices for June 2025. The 1-month returns were positive across all generic indices. The Nifty closed June 2025 with gains of 3.37%. Nifty Midcap-100 rallied 4.11%; while the Small Cap 100 rallied 6.73% in the month. Small caps were the star of the month, gaining more than 16% in the last two months alone.
• What about thematic indices in June 2025? After a sterling performance in May, defence took a back seat in June. Nifty Capital markets was the star of the pack at 11.2%, while other themes like core housing, Digital theme, India Internet theme, and the corporate group themes played out quite well in the month.
• Let us turn to strategy indices in June 2025? With small and mid-caps back in action, the top performing strategies were the Nifty 100 Alpha 30 and the Nifty 200 Alpha 30 strategies. Interestingly, the Momentum theme also played out quite well in June 2025; both in terms of mid-cap momentum and small cap momentum.

Let us turn specifically to the sectoral indices and how they ranked in terms of returns, risk, and 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 Non-Banks	26.89	30.58	25.48
Nifty Financial Services	17.09	21.77	21.82
Nifty Healthcare Index	15.77	25.28	20.72
Nifty Pharma	12.55	22.88	18.00
Nifty Bank	10.28	20.67	22.63
Nifty IT	9.96	14.20	23.85
Nifty Private Bank	8.96	19.96	19.89
Nifty Consumer Durables	0.49	19.54	24.29
Nifty FMCG	-1.41	15.28	15.00
Nifty PSU Bank	-1.59	44.68	39.53
Nifty Metal	-1.93	27.89	38.79
Nifty Oil & Gas	-2.50	16.86	21.61
Nifty Auto	-4.57	27.80	30.00
Nifty Realty	-10.47	37.26	37.65
Nifty Media	-11.37	-2.01	6.09

Data Source: NSE Indices

There are interesting takeaways from 1 year returns.

• For the fifth month in a row, BFSI led the returns narrative, with NBFCs again ruing the roost. Nifty Non-Banks Index led with 26.9% returns in last one year; followed by Nifty Financial Services at 17.1% and Nifty Healthcare at 15.8%. A total of 7 out of 15 sectors gave negative returns; with the worst being Media -11.4%, Realty -10.5%, Auto -4.6%, and Oil & Gas -2.5%. The impact of stiff valuations and the global uncertainty appears to be impacting sectors on the downside.
• Out of the 15 sectors, 8 sectors gave positive returns in last 1 year, while 7 gave negative returns. The 15 sectors gave average returns of 4.5% in last 1 year, 22.8% CAGR over 3 years, and 24.4% CAGR over 5 years. The 5-year returns are skewed due to the COVID base. While the top-5 sectors gave 16.5%, bottom-5 gave -6.2% over 1 year.

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	29.12	1.47	0.69	0.47
Nifty Media	26.70	0.99	0.50	0.25
Nifty Metal	24.73	1.36	0.75	0.56
Nifty PSU Bank	24.64	1.13	0.62	0.39
Nifty IT	22.23	1.06	0.65	0.42
Nifty Non-Banks	20.72	1.23	0.81	0.65
Nifty Oil & Gas	20.32	1.14	0.76	0.58
Nifty Auto	20.20	1.21	0.82	0.67
Nifty Consumer Durables	18.91	0.96	0.69	0.48
Nifty Pharma	16.90	0.70	0.57	0.32
Nifty Healthcare Index	16.22	0.73	0.61	0.38
Nifty Financial Services	15.54	0.99	0.87	0.75
Nifty Private Bank	15.19	0.92	0.82	0.68
Nifty Bank	14.87	0.93	0.85	0.72
Nifty FMCG	14.29	0.60	0.57	0.33

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, Metals, and PSU banks rank on top. That approximately corresponds with worst 1-year returns; so steep valuations are getting specifically unwound. Over 5-years, higher volatility in these sectors was offset by higher returns. Healthcare and banks gave top class returns amidst modest volatility.
• The 15 sectors had average volatility of 20.0% and average beta of 1.03, which approximately reflects Nifty. A total of 7 of the 15 sectors were aggressive with beta of more than 1. FMCG and Pharma are the best portfolio diversification bets, due to low correlation with Nifty; and a low return explanation factor.

SECTORAL INDICES AND THE VALUATION PLAY IN LAST 1 YEAR

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

Sectoral Index	Price/Earnings (P/E Ratio)	Price / Book (P/BV)	Dividend Yield
Nifty Consumer Durables	69.36	14.66	0.27
Nifty Realty	49.06	5.63	0.25
Nifty FMCG	41.43	10.23	2.02
Nifty Healthcare Index	37.47	6.15	0.60
Nifty Pharma	31.61	5.36	0.74
Nifty IT	28.81	7.67	2.62
Nifty Non-Banks	25.37	4.01	0.78
Nifty Auto	24.91	4.71	1.06
Nifty Metal	19.37	2.67	2.09
Nifty Private Bank	18.06	2.52	0.46
Nifty Financial Services	18.00	3.08	0.87
Nifty Bank	15.19	2.36	0.94
Nifty Oil & Gas	14.05	1.75	2.66
Nifty PSU Bank	7.31	1.19	2.53
Nifty Media	N.A.	2.07	0.81

Data Source: NSE Indices

Here are key takeaways from the three valuation parameters.

• Consumer durables, Realty, FMCG, and Healthcare are still richest in valuations. Post tariff uncertainty; India plays like FMCG, consumer durables and banks are attracting higher interest. The volatility has made many sectors attractive in dividend yield terms. For instance, Oil & Gas at 2.66%, IT at 2.62%, PSU Banks at 2.53%, Metals at 2.09%, and FMCG at 2.02% stand out as Dividend Yield picks.
• The average P/E of all sectors stands at 28.6X, higher on MOM basis. The average dividend yield looks relatively attractive at 1.25%.

Sectoral returns have shown positive traction in June 2025, although there are still pockets of steep valuations, as well as pockets of reasonable valuations in the market.