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

3 Apr 2025 , 10:13 AM

STOCK MARKET BIG PICTURE FOR MARCH 2025

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

• Let us start with generic indices for March 2025. In this case, the 1-month returns were positive across all generic indices. The Nifty closed March 2025 with gains of 6.31%. The Nifty Next-50 was the star among generic indices gaining 10.55% in March 2025. Among smaller indices, mid-cap 100 index gained 7.85%, Small Cap Index gained 9.50%, while the Nifty Microcap 250 gained 6.19%.
• What about thematic indices in March 2025. REITS Index was the only theme to give negative returns at -1.1%. The star performers in March 2025 were Nifty India Defence 24.75%, Nifty PSEs 16.03%, Nifty Energy 11.85%, Nifty Commodities 11.49%, Nifty Railways 10.69%, and Nifty Capital Markets 10.53%. Government spending and commodities were the broad themes in March 2025.
• Let us turn to strategy indices in March 2025? There was a mixed performance across various strategies. For instance, Nifty 200 Value 30 stood out at 12.56% returns, followed by Nifty High Beta at 10.96%, and Nifty Value 50 at 10.80%. Momentum is one of the strategies that appeared to falter in March 2025.

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	20.67	14.58	22.79
Nifty Non-Banks	16.64	17.54	26.28
Nifty Healthcare Index	14.10	18.13	26.28
Nifty Pharma	12.01	16.77	24.98
Nifty Metal	10.90	13.47	43.81
Nifty Consumer Durables	10.66	10.04	24.23
Nifty Bank	10.40	13.29	22.62
Nifty Private Bank	10.11	12.61	20.99
Nifty IT	8.07	2.64	26.04
Nifty FMCG	1.24	15.88	16.53
Nifty Auto	0.17	27.41	36.25
Nifty Realty	-5.23	22.86	37.55
Nifty Oil & Gas	-6.87	11.31	25.80
Nifty PSU Bank	-9.97	33.63	37.56
Nifty Media	-17.28	-14.24	7.86

Data Source: NSE Indices

There are some interesting takeaways on 1 year returns.

• Like in February, even in March, it BFSI that led the stakes. Nifty Financial Services Index leads with 20.67% returns in the last one year; followed by NBFCs at 16.64% and Healthcare at 14.10%. Media was down -17.28%, while PSU banks are down -9.97%. However, on a 5-year basis, all sectors have given positive CAGR returns.
• Out of the 15 sectors, 11 sectors gave positive returns in last 1 year, while 4 sectors gave negative returns. The 15 sectors gave average returns of 5.04% in last 1 year. While the top-5 sectors gave 14.86%, bottom 5 gave -7.84%. Media has given negative returns even on a 3-year returns basis.

HOW SECTORAL INDICES FARED ON RISK IN LAST 1 YEAR?

Returns just represent one side of the coin. Here is a look at the risk picture.

Sectoral Index	1-Year Volatility	1-Year Beta	1-Year Correlation	1-Year R2
Nifty PSU Bank	29.42	1.56	0.74	0.55
Nifty Realty	29.02	1.40	0.67	0.46
Nifty Media	26.75	1.07	0.56	0.31
Nifty Metal	25.47	1.35	0.74	0.55
Nifty Oil & Gas	24.04	1.36	0.79	0.63
Nifty Non-Banks	21.09	1.25	0.83	0.68
Nifty IT	20.01	0.79	0.55	0.30
Nifty Auto	19.88	1.09	0.76	0.59
Nifty Consumer Durables	18.81	0.90	0.67	0.45
Nifty Bank	17.11	1.06	0.86	0.75
Nifty Financial Services	17.11	1.07	0.88	0.77
Nifty Private Bank	16.90	1.01	0.84	0.70
Nifty Pharma	15.83	0.60	0.53	0.28
Nifty Healthcare Index	15.69	0.62	0.56	0.31
Nifty FMCG	14.54	0.49	0.47	0.22

Data Source: NSE Indices

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

• In terms of standard deviation of returns, PSU banks, realty, and metals continue to be the most volatile, despite the correction in recent months. Over a longer timeframe higher volatility has been compensated by higher returns in all these 3 sectors. Healthcare remains the only sector to give top class returns despite having low volatility among key sectoral indices.
• The 15 sectors had average volatility of 20.78% and average beta of 1.04, which approximately reflects Nifty. A total of 10 of the 15 sectors were aggressive with beta of more than 1. FMCG, IT and Pharma remained 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 March 2025.

Sectoral Index	Price/Earnings (P/E Ratio)	Price / Book (P/BV)	Dividend Yield
Nifty Consumer Durables	71.88	14.47	0.40
Nifty FMCG	42.81	10.26	2.04
Nifty Realty	41.08	4.92	0.42
Nifty Healthcare Index	37.62	5.87	0.54
Nifty Pharma	32.02	5.18	0.66
Nifty IT	27.87	7.64	2.81
Nifty Non-Banks	22.34	3.45	0.85
Nifty Metal	21.16	2.64	2.28
Nifty Auto	20.82	4.51	1.03
Nifty Financial Services	16.80	2.90	0.86
Nifty Private Bank	15.41	2.24	0.58
Nifty Bank	13.18	2.20	1.01
Nifty Oil & Gas	12.68	1.58	2.92
Nifty PSU Bank	6.62	1.22	2.36
Nifty Media	0.00	1.20	1.14

Data Source: NSE Indices

Here are key takeaways from the three valuation parameters.

• Consumer durables, FMCG, and Realty are still having the richest valuations, despite the recent correction. The sharp correction has made many sectors attractive in dividend yield terms. For instance, oil & gas at 2.92%, IT at 2.81%, PSU Banks at 2.36%, Metals at 2.28%, and FMCG at 2.04% stand out as Dividend Yield picks.
• The average P/E of all sectors stands at 25.49X, a small bounce since February. The average dividend yield looks relatively attractive at 1.33%.

Sectoral returns have shown positive traction in March 2025; although it is financials and healthcare that now stand out as the true-blue value stories!