The Indian stock market extended its rally on Tuesday, marking the fourth straight session of gains. The Sensex rose more than 400 points, while the Nifty 50 crossed the 25,000 level in intraday trade, supported by easing geopolitical tensions and strong domestic developments.
Optimism improved as global markets advanced on hopes of progress towards resolving the Russia-Ukraine war. Sentiment was buoyed by diplomatic efforts, including US President Donald Trump’s meetings with Ukrainian President Volodymyr Zelensky, European leaders, and earlier discussions with Russian President Vladimir Putin.
On the domestic front, Prime Minister Narendra Modi’s announcement of a significant Goods and Services Tax (GST) reform further strengthened equities, pushing benchmarks higher.
Despite the recent positive momentum, concerns of volatility remain. Experts believe that the rally will be short-lived amid valuation and earnings concerns.
VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, noted, “The White House talks indicate that there is a reasonable chance of ending the war. And, if this happens, the secondary tariff on India for buying oil from Russia would become irrelevant. This may turn out to be a positive from the market perspective. But it would be premature to expect positive responses from the Trump administration since the India-US relations are strained and India has been making tactical initiatives to improve relations with China even while reinforcing the already strong relations with Russia. Meanwhile, the policy initiatives from the Government on the GST front, with indications of next-generation reforms, have improved market sentiments significantly. However, the fundamentals (earnings growth) will take time to respond. A sustained rally in the market will happen only when we have indications of earnings revival.”
Should You Stay Invested in Indian Equities?
With short-term volatility still in play, should investors step back from equities, or do stocks continue to dominate for long-term growth?
Chethan Shenoy, Executive Director & Head – Product & Research at Anand Rathi Wealth, noted that while some volatility may persist, it is unlikely to be severe as “much of the selling has already happened.”
He explained that the current news flow is emerging when markets have already found a base, which reduces the risk of a major downside from here. Instead of shifting fully to cash or overweighting gold, Shenoy suggested investors “stick to their allocation strategy,” maintaining about 20 per cent of the long-term portfolio in debt or gold depending on preference, but not beyond that level.
Meanwhile, Ranju Rajan, Head of Managed Accounts at Axis Securities, believes volatility is likely to persist until tariff discussions reach a resolution and corporate earnings guidance and sentiments show improvement.
“A positive shift on these fronts should also translate into stronger momentum in credit growth, capex, and consumption—creating ample opportunities for stock selection and sector rotation. However, such volatility comes with opportunity. This will set the stage for selective opportunities to emerge in the long term.”
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
