My final article of the previous year was published on December 28, 2024, titled “15 IPO listings in 21 days made this December the busiest in capital markets.” Few could have anticipated then that 2025 would unfold as one of the most consequential years from a capital markets perspective. There was scarcely a dull moment throughout the year. It proved to be a period of profound transformation in global politics, trade, and economics, leaving a lasting imprint on nations and financial markets alike.

The year began with swift and decisive action. In January 2025, President Trump commenced his second term with an assertive America First agenda. The immediate post inauguration phase was marked by an aggressive policy thrust, with 26 executive orders signed on the first day itself. These focused on advancing core campaign priorities, including tightening immigration enforcement, and restructuring federal workforce governance.

February delivered a significant boost to middle class consumption in India through substantial tax relief, with the personal income tax exemption threshold raised to ₹12 lakh. The Union Budget for FY25–26 was designed to accelerate economic growth, stimulate domestic demand, strengthen self-reliance under the Atmanirbhar Bharat framework, and ease the tax burden, while maintaining a disciplined path of fiscal consolidation.

March and April witnessed an unexpected and far-reaching policy announcement from the United States, termed Liberation Day. During this period, US tariffs and the trade discussion escalated sharply as the administration intensified its protectionist stance. Tariffs on steel and aluminum imports were raised, earlier exemptions were withdrawn, in addition, a new reciprocal tariff regime was introduced, including a 26 percent ad valorem tariff on Indian imports. These measures significantly heightened global trade tensions, triggered retaliatory responses from major trading partners, increased costs for manufacturers and consumers, disrupted global supply chains, and firmly established tariffs as a central tool of US economic policy.

Amid these global trade dynamics, April saw a rollercoaster ride for foreign institutional investors (FIIs) in Indian equity markets. April 2025 marked a temporary turnaround, with net FII inflows of ₹4,223 crore following sustained outflows during the first quarter. This was supported by stabilizing global markets, easing recession fears, and attractive Indian equity valuations. However, the latter half of the year witnessed renewed selling pressure driven by global macroeconomic concerns, trade tensions, and geopolitical risks.

Overall, 2025 reflected highly oscillating FII sentiment, with net outflows of approximately ₹1.6 lakh crore until December 24. The year saw an initial defensive stance, a mid-year opportunistic phase, and renewed caution in the second half, highlighting the continued influence of global factors on foreign capital flows. Domestic investors, meanwhile, played a crucial stabilizing role.