When the market rises but your stocks don’t

The Nifty 500 Total Return Index rose 7.2% in 2025. On paper, that appears to be another year of steady wealth creation for Indian equities.Fund managers will benchmark against it. Retail investors will compare their portfolios to it and wonder where they went wrong.

They should stop wondering. In 2025, the index return and the experience of the average stock diverged sharply.The median stock in the Nifty 500 fell 4.8% for the year. So it did not gain less than the index, it declined outright.

The gap between the headline return and the typical stock stretched to nearly 12 percentage points, a chasm wide enough to swallow most portfolios.How does an index rise 7% when its median constituent falls 5%? Concentration.The top 50 stocks, just 10% of the index by count but over half by weight, averaged returns of 8.3%. The remaining 450 averaged a negative 1.9%.Reliance Industries alone, with its 5%+ weight and 28.6% return, contributed more than the combined returns of hundreds of smaller companies.Bharti Airtel's 32% gain added another sizeable chunk. These heavyweight performances, mathematically amplified by their dominance, dragged the index upward even as most stocks drifted down.The histogram reveals what no single number can: markets were not particularly generous in 2025.

The distribution is skewed with far more stocks in negative territory than in positive territory.The dark vertical line marks where the index finished; the dashed line marks the median stock.The 12 percentage point gap between them contains the year's essential story. Only 33% of stocks, one in three, managed to beat the index.Just 211 stocks, 42% of the universe, posted positive returns. Meanwhile, 125 companies lost more than 20%, and 10 lost more