The Indian stock market has been rangebound for almost a month now. The benchmark index has traded in a range of 24,470-25,670 since June. At first glance, it appears that the Indian stock market lacks fresh triggers to sustain gains above 25,600, which can drive it to fresh highs.
However, the Indian stock market has exhibited remarkable resilience since March despite geopolitical tensions, tariff-related uncertainties, and elevated domestic market valuations. The Nifty 50 has been in the green monthly since March. However, in July so far, it has lost about half a per cent.
Why has the Indian stock market been rangebound?
The biggest factor limiting the gains of the domestic market is lingering uncertainty over an India-US trade deal.
Despite prolonged negotiations and positive signals from Washington, India and the US have yet to finalise a trade pact.
Both countries have now pushed back their deadline to finalise the trade deal to mid-July as US President Donald Trump extended the deadline for reciprocal tariffs to 1 August.
While hopes are high that India and the US will strike a deal before the deadline, a full agreement between the two countries could be a multi-phased process.
In that case, it is too early to conclude whether a potential preliminary deal will significantly trigger the market.
Q1 results hold the key
Indian corporates will release their June quarter (Q1FY26) scorecard in the coming days. IT major TCS will report its Q1 results on July 10.
Experts say that while an India-US trade deal will be an immediate trigger, the market needs significant earnings growth to sustain gains and touch record highs.
Some experts highlight that the market has largely discounted a trade ideal, and it may not push the market beyond a range.
“A clear breakout of the upper range of Nifty 25500 may happen on positive news of a trade deal between the US and India. But this is partly discounted by the market and, therefore, will not be sufficient to sustain the rally well beyond Nifty 25,500,” said VK Vijayakumar, Chief Investment Strategist, Geojit Investments.
Can Q1 results push the Nifty 50 to a record high?
The Nifty 50 may see limited upside in the short term, primarily due to muted earnings growth. Profit growth for index-heavy companies is expected to remain in single digits, which could cap gains in the coming months.
According to most experts, the June quarter results may not push the market to fresh highs.
Experts expect a significant recovery in earnings only from Q3 onwards, even though they highlight that Q1 results will be better than the previous quarter.
“The market’s move will depend on what kind of deal we get on tariffs. Q1 earnings are expected to be slightly better than Q4, so that may not trigger a broad-based excitement in the market,” said Pankaj Pandey, the head of research at ICICI Securities.
“We will see more of a stock-specific action. At this time, the market has limited triggers for a breakout. The range-bound trade may continue for some time. We can see significant earnings growth in the second half of the current financial year (H2FY26),” Pandey said.
In the near term, with mild earnings growth, stock-specific action is likely to dominate rather than a broad-based market rally.
Brokerage firm JM Financial expects Nifty Q1 PAT (profit after tax) to rise 10.4 per cent year-on-year (YoY), led by strong performance in oil and gas. Excluding BFSI, Q1 Nifty PAT is expected to rise at 14 per cent.
“Weak BFSI performance can be attributed to moderating loan growth, NIM (net interest margin) compression of 30 bps YoY, weak fee income growth and elevated credit costs,” JM Financial said.
Indian stock market: Long-term story intact
Barring short-term obstacles, experts say any correction in the market is an opportunity to buy because India’s long-term story remains intact.
“Most domestic macroeconomic indicators remain supportive. Low inflation, robust GDP growth, strong foreign exchange reserves, a surplus monsoon, and the prospect of RBI rate cuts all paint a favourable backdrop for the economy,” said G. Chokkalingam, the founder and head of research at Equinomics Research Private Ltd.
However, Chokkalingam added that a key near-term concern is the ongoing trade uncertainty between India and the US. Markets are closely watching for signs of a deal, and sentiment may remain cautious until there is clarity on that front.
From an earnings perspective, Chokkalingam believes a meaningful recovery may still be one to two quarters away.
“At the current pace of earnings growth, the Sensex could rise another 7–8 per cent during this fiscal year,” he said.
Amid expectations of moderate gains in the benchmarks, experts believe real opportunities are in the broader market.
“With over 4,000 small- and mid-cap stocks, investors have a wide universe to explore compelling opportunities—whether it’s unique growth stories, deep-value plays, or acquisition candidates,” said Chokkalingam.
“The rise in India’s retail investor base is also encouraging: more than 22 crore investors are now registered, with nearly six lakh new investors joining every week. This expanding participation bodes well for sustained interest in mid- and small-cap stocks,” Chokkalingam added.
Chokkalingam suggests investors may consider allocating at least 30 per cent of their equity portfolio to large-cap stocks like those in the Sensex and Nifty, while 60–70 per cent can be exposed to mid- and small-caps, depending on individual risk appetite for the next two quarters.
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Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
