Let's Learn from Japan's Market Journey

Today’s Market Update

It has been a very good start to the November 2025 series. Before we talk markets, congratulations to our girls for lifting the maiden ICC World Cup — a wonderful way to begin the month!

The Indian markets also started November on a positive note. Though Nifty was only mildly up today and turned out to be the weakest among major indices, the rest of the market did really well. There was broad-based traction with strong gains in mid caps, small caps, and micro caps.

Global cues were equally positive. US markets closed strong on Friday, and Japan’s Nikkei 225 has been on fire, recording its best month in decades. Asian indices opened well, helped by easing tensions between the US and China, which have boosted global sentiment.

• Nifty closed 0.16% higher at 25,763 after testing key support around 25,700.

• On the other hand, Nifty Next 50 surged 0.94% and is now testing resistance around 70,500.

• Midcaps and Small caps gained about 0.7–0.8%, showing good traction.

• The Nifty Bank index rose 0.56% and seems to be consolidating after a big rally from late September.

• Gold and silver were flat today, taking a breather after strong runs in recent weeks.

Other Market Triggers

• Market breadth remained strong throughout the session with 334 stocks advancing against 166 declines, confirming that the broader market remains healthy.

• Among key movers, PSU banks, real estate, and capital markets sectors led the gains.

• The real estate index jumped 2.2% as strong earnings and new launches, especially from DLF, lifted sentiment.

U.S. Market Update

• In the global markets, US indices like Nasdaq and S&P 500 have been performing well. Nasdaq continues to lead over one- and three-month periods.

• Heavyweight stocks such as Amazon and Tesla were top gainers recently, but the concern remains that any weakness in these giants could impact broader sentiment.

What to watch next ?

• Barring IT and FMCG, almost every sector saw a healthy move. This shows continued optimism in the broader market, which is a very good sign because it means participation is spreading beyond a few large-cap names.

• Once there’s more clarity on the ongoing Indo-US trade negotiations, that could become a major tailwind for the markets.

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Learning from Japan's Market Journey

Japan's Market Milestone: A 35-Year Wait

The Japanese stock market has recently achieved a significant milestone: crossing its previous peak reached in 1990. This achievement took a remarkable 35 years to materialize. Reflecting on the longer journey from 1950 to 2025, a 75 year span, the Japanese market shows an overall Compound Annual Growth Rate (CAGR) of 8.8%.

While this 8.8% CAGR sounds appealing, particularly in an economy with virtually zero interest rates, the path to these returns was far from straightforward or easy.

The Two Distinct Market Phases

To understand the complexity of this journey, we can divide the 75-year period into two distinct phases:

The bulk of the 8.8% overall CAGR was accumulated during the first 40 years. The subsequent 35 years offered negligible growth.

The Impact on Japanese Investors

Imagine a Japanese investor who entered the market around 1990. This individual, likely born around 1965 or 1970, would be in their early 50s today. They have not witnessed the market consistently growing throughout their entire adult life. Consider someone who joined the workforce at 22 or 23 in 1990: the market fell for the next 20 years, with only a slight recovery in the last decade.

• This prolonged stagnation led to a complete washout of the 'equity culture' in the country.

• Only now, with the market surpassing its old peak, will some confidence in equities potentially start to return.

A Contrast with the Indian Market

When we look at the Indian market, which appears to grow reliably every five to ten years, this Japanese experience serves as a stark reminder. We are fortunate and blessed to be investing in a market and a country where growth potential is abundant.

Future Possibility: Could India Face a Similar Flat Phase?

The Japanese experience raises an important question for Indian investors: Is it possible for India to also experience a period of very rapid growth (say, 5, 10, or 15 years) followed by a long, flat period, similar to Japan's second phase?

• This is a real possibility that warrants consideration and thought for long-term investing strategies.

Key Learning

Market Stagnation Can Last Decades: The journey of a market's overall CAGR can be non-linear and incredibly challenging. Even a respectable long-term CAGR (like Japan's 8.8% over 75 years) can mask a 35 year period of near-zero growth, wiping out an equity culture.

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