Indian households gained ₹117 lakh crore in 2025 as gold prices surged, delivering the biggest wealth boost in 25 years. The windfall strengthened spending buffers, lifted gold-backed loans, highlighted equity underperformance, and reinforced disciplined asset allocation across equity, debt and gold.
Indian households experienced a wealth surge of Rs 117 lakh crore or $1.3 trillion in the calendar year 2025 due to appreciating gold prices and this creates a significant spending buffer, as retail loans against gold have already seen a sharp rise, according to HDFC Mutual Fund Yearbook 2026.
The report highlighted that this was the highest gain in wealth due to the surge in gold prices in the last 25 years. The gold prices have appreciated by approximately Rs 57,000 per 10 grams in the calendar year 2025 (till December 15, 2025), in addition to Rs 14,000 per 10 grams in the calendar year 2024 creating a significant positive wealth effect.
Also Read | PSU, infra, manufacturing & defence mutual funds in spotlight ahead of Budget 2026. Should you invest?
The fund house said that the calendar year 2025 served as a period of consolidation for Indian equities while showcasing the extraordinary resilience of alternative assets like Gold.
India’s under performance vs global peers in 2025 has led to a dip in India’s share in global market cap. The NIFTY 50 underperformed global peers and emerging markets by roughly 25%, the worst relative performance in three decades, bringing India’s valuation premium back close to its long-term average.
In the calendar year 2025, Gold, Emerging Markets, Europe and Magnificent 7 were the top performers whereas Oil, USD, Bitcoin were the worst performers in the same period.
After years of outperformance, small and mid-caps underperformed large-caps in 2025. Valuations have moderated across segments, though large-caps continue to offer a better price-value proposition. Notably, nearly 30% of small-cap stocks are down 30% or more from their 52-week highs.
HDFC Mutual Fund recommends that first-time investors can consider investing in hybrid funds to reduce portfolio volatility and endeavor to benefit from the goodness of all the three major asset classes – Equity, Debt and Gold.
To navigate this environment of “time correction” and volatility, the sources emphasize disciplined asset allocation
According to the report, historical analysis shows that the probability of loss in the BSE Sensex decreases to 0% when the investment horizon extends to 15 years or more, reinforcing the “think long-term” philosophy.
In the shorter horizon, say one year or three years, the number of instances when BSE Sensex Return < 0% was 2,752 and 1,037 respectively whereas the percentage of probability of loss would have been 26% and 10% respectively.
In a five year and 10 year period, this number of instances decreased to 653 and 53 respectively whereas the percentage of probability of loss would have been 7% and 1% respectively.
Also Read | HDFC Mutual Fund portfolio December moves: RIL, IndiGo, HAL among key buys and sells
While India faced relative deficits compared to global peers, the macroeconomic fundamentals remain robust, characterized by steady real GDP growth, controlled deficits, and a strategic policy shift toward stimulating domestic demand, the report said.
Active stock selection, risk management and avoiding excesses hold the key for long term wealth creation, the fund house recommends.
While the government capex has surged post-COVID, it is now moderating; private capex remains in a "wait and watch" mode due to global trade uncertainties and Chinese oversupply.
Primary capital raised approx. US$65-70 billion in the last two years makes India one of the largest primary markets in the world. Additionally, Indian promoters have pared holdings worth over US$25 billion over the last two years.
Pipeline of IPOs filed or in progress estimated at US$29 billion. The report further stated that 48% of IPOs (by count) launched in 2024 and 2025 have generated negative returns.
The RBI has shifted toward a more supportive stance to manage foreign exchange volatility and counter FPI outflows.
In FYTD26, RBI has bought equivalent of 50% of Central Government (CG) net market borrowings through Open Market Operations (OMOs). USDINR Buy/sell Swap (US$15 billion) and CRR reduction of 100 bps also released liquidity (Rs 2.5 lakh crore).
The fund house said that, "In our view RBI is likely to provide ample liquidity in FY27 as well which should be supportive of lower yields."
To counter sluggishness, a multi-pronged stimulus of approximately 3% of GDP is expected between FY25 and FY28. This includes the 8th Pay Commission impact ($60 billion wage increase), GST rate rationalization (Rs 1.8 lakh crore forgone), and state welfare schemes exceeding Rs 3 lakh crore.
Also Read | ICICI Prudential AMC shares surge 7% after Q3 PAT jumps 45% YoY
The global economy faces headwinds from geopolitical risks and shifting trade policies. Proposed sweeping US tariffs remain a key monitorable, though the broader Indian market may see limited impact due to exemptions for services and pharmaceutical generics.
AI-driven investments are a major global growth driver, contributing to 40% of US GDP growth, though the return on investment (ROI) remains a point of debate among investors. Persistence of deflationary trends in Chinese exports and oversupply in commodities remain headwinds for global manufacturing.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
If you have any mutual fund queries, message on ET Mutual Funds on Facebook/Twitter. We will get it answered by our panel of experts. Do share your questions on [email protected] alongwith your age, risk profile, and Twitter handle.
