Nifty 50 vs S&P 500 & DAX: Latest 2025 Returns + 2026 Forecast

January, 2026
A Data-Driven Analysis of Performance, Correlations, and Some Careful Thoughts for Indian and Global Traders. 

India's Nifty 50 has shown resilience in 2025 amid global volatility, but correlations with major indices like the S&P 500 and DAX persist through shared macro drivers. Accurate 2025 YTD data reveals a more nuanced picture than short-term snapshots, with all three indices posting positive returns over the past year despite intra-year corrections. For CFD, forex, and equity traders, understanding these dynamics may be a sign to support diversified positioning into 2026.1 

1. 2025 Performance Recap (YTD as of Mid-December) 

The table below summarizes the updated performance figures, reflecting the stronger rally seen across global markets in the latter half of 2025. 

Nifty's gains reflect strong DII buying (₹1,792.25 Cr net on Dec 15, 2025) that is offsetting continued FII selling (₹-1,468.32 Cr net on Dec 15, 2025)² which is cushioning the index. However, the rupee recently crossed the 90-per-dollar mark and hit a record low of ₹90.75, causing USD returns for foreign investors to compress to a approximately 3-5% range. Global indices faced mid-year pullbacks (S&P-5% Q2 dip, DAX -8% energy shock but rebounded strongly on Fed and ECB policy easing. 

2. Drivers Behind 2025 Moves 

Nifty 50 Resilience 

• Capital Inflows: Record DII buying(~ ₹ 1.8 L Cr in Dec so far) cushioned FII outflows.²
• Sector Strength: Information Technology and pharmaceuticals benefited from US/EU demand; financials 35% rode credit growth.7 
• Macro Stability: GDP ~6.6%, inflation ~4-5%, RBI steady at ~6.25%.
• Limitation: ~55-60% Nifty revenue from global-exposed firms (IT, autos, metals) ties it to world demand.  

 

S&P 500 Strength 

The Magnificent 7 drove ~+20% sector gains despite broader rotation to value. 

The Fed held rates at ~4.75-5% after soft landing signals; inflation cooled to ~2.5%. 

Valuations eased from 30x peaks but remain stretched at ~24x$ forward P/E. 
 

DAX Recovery 

Manufacturing PMI climbed to 48 (expansion territory by late 2025).13 

ECB cuts to ~3% boosted cyclicals; renewables offset gas dependency.  

Forward P/E ~15x$ offers relative value14 vs peers. 
 

3. Current Valuations (Mid-Dec 2025) 

India trades at an Asia premium but below historical peaks (~26x$). US elevated on growth bets; Germany cheapest for re-entry.
 

4. Correlation Realities 

• Rolling 1‑year correlation (Nifty-S&P): ~0.65‑0.75.
• Rolling 1‑year correlation (Nifty-DAX): ~0.55‑0.65.

Divergences occur during liquidity shifts (India's domestic buffer), but global risk-off events synchronize downside (e.g., Aug 2025 yen carry unwind hit all three ~-3‑5%).

5. 2026 Forecast: Synchronization Ahead 

Scenario: Bull Case

Probability: 60%

• Fed cuts ~75-100bps (to ~3.75-4%) on cooling jobs data → risk-on rally.
• ECB to ~2% + EU fiscal stimulus (green capex ~€800B$) lifts DAX ~12-15%.
• India GDP ~6.5‑7%, RBI cuts to ~5.5% if monsoon holds → Nifty 26-28k (~+15%).

Scenario: Base Case

Probability: 30%

• Gradual easing, China ~4.5% growth →S&P ~+8-10%, DAX ~+7-9%, Nifty ~+10-12%.

Scenario: Bear Case

Probability: 10%

• US recession (if unemployment >5%), EU stagnation → correlated ~ -10-15% correction.

Key Watches: US Nov jobs (Dec 6), ECB Dec meeting, India Budget Feb 2026, China Q1 GDP.

US recession (if unemployment >5%, EU stagnation   → correlated ~ -10-15% correction. 

  
Key Watches: US Nov jobs (Dec 6), ECB Dec meeting, India Budget Feb 2026, China Q1 GDP. 
 

6. Final Positioning 

2025 proved India's relative strength without true decoupling—global liquidity remains the tide. For 2026, positions could tend to a mean reversion causing traders watching and calculating out carefully and not chase divergence as a possible conclusion.