Why Sensex has delivered no returns over last 1 year
**Why Sensex Has Delivered No Returns Over the Last Year**
*By Dwaipayan Roy | Sep 20, 2025, 04:21 PM*
The Bombay Stock Exchange’s benchmark index, the Sensex, has posted a modest return of -0.7% over the past year. This underwhelming performance is largely due to weak corporate earnings, persistent foreign portfolio investor (FPI) selling, and high valuations.
### Market Dynamics
**Massive FPI Outflows**
In 2025 so far, Foreign Portfolio Investors have withdrawn ₹1.4 lakh crore from Dalal Street, reallocating investments to other countries. Analyst Naveen Chouhan explains that this continued selling is driven by the outperformance of developed markets and currency concerns. FPIs are shifting capital back to their home markets or other developed economies, which currently offer better returns than emerging markets, partly due to the depreciation of the Indian rupee against major global currencies.
**Corporate Earnings Growth Stagnation**
Corporate earnings growth among Nifty 50 firms has remained limited to mid-single digits. Factors such as delayed demand recovery and input cost pressures have weighed down margins. Krishnan V R, Chief of Quantitative Research at Marcellus Investment Managers, notes that valuations peaked around September last year. With corporate earnings growth moderating to mid-single digits, it is unsurprising that equity indices have barely delivered returns over the past year.
### External Factors
**Political Uncertainties and Trade Tensions**
Political and policy-related uncertainties have further dampened market sentiment. Sunny Agrawal, Head of Fundamental Research at SBI Securities, points out that populist measures adopted by the government early in its third term, coupled with a slowdown in government capital expenditure, have worsened investor confidence. Global uncertainties have also triggered capital flight toward safe havens. Additionally, trade tensions with the US have heightened policy uncertainty, contributing to increased investor caution.
### Market Resilience
**SIP Inflows Cushion the Market**
Despite significant FPI selling, steady inflows from mutual fund Systematic Investment Plans (SIPs) have cushioned the market from a sharper decline. Analysts describe the current phase as a “time correction,” where valuations remain elevated and prices consolidate rather than witness a steep fall. Neeraj Chadawar from Axis Securities remarks that the markets are aligning with earnings growth and anticipates that the upcoming Q2 earnings season will reflect similar trends.
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Despite various headwinds, the Sensex is navigating a complex environment marked by subdued earnings and cautious investor behavior, with domestic inflows providing a measure of stability amid global uncertainties.
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