India’s equity markets are expected to maintain their resilience in the second half of 2025, with the Nifty50 likely to trade within a range of 26,300 to 27,500 by the end of the year, according to smallcase managers. This forecast is anchored in strong domestic macroeconomic fundamentals, supportive monetary policy outlook, and continued policy-led momentum in key sectors.
The Nifty50 has already rebounded from its March 2025 lows. smallcase managers expect resistance near the 26,300 level, but if the index breaks past this mark, it may head toward 27,500 or higher in the coming months, driven by robust earnings and liquidity.
Global and Domestic Triggers in Play
The market trajectory will be influenced by several macro and geopolitical developments. smallcase managers believe that clarity on U.S. trade tariff policies, resolution of conflicts in the Indo-Pacific and Middle East, and the finalisation of bilateral trade agreements like the UK–India Free Trade Agreement (FTA) could act as key catalysts. These factors have the potential to unlock export opportunities, particularly in pharmaceuticals, engineering, and textile sectors.
However, the outlook for U.S. inflation remains a critical watchpoint. Though currently subdued, inflationary pressures could rise if supply chains are disrupted due to trade protectionism. If global supply stabilises and trade deals are concluded swiftly, the U.S. Federal Reserve could begin cutting interest rates, improving global liquidity conditions and spurring foreign inflows into Indian markets.
While the Fed has maintained its policy rates so far in 2025, citing persistent inflation and employment challenges, the European Central Bank (ECB) has already trimmed rates by 100 basis points. This could pave the way for the Reserve Bank of India (RBI) to consider similar rate cuts, which would further support domestic consumption and market sentiment.
Dr. Vikas Gupta, CEO of Omniscience Capital, believes rate cuts and stable monsoons could fuel household consumption and GDP growth. He sees markets reverting to their five-year average price-to-earnings (P/E) ratio of 25, or even exceeding it, if earnings momentum sustains.
Meanwhile, Robin Arya, Founder of GoalFi, highlighted the expiry of the U.S. tariff pause as a near-term trigger. If trade deals fail to materialise, Indian equities could witness volatility, he warned.
H1 2025 Market Recap
The first half of the year was marked by global uncertainty. Delays in U.S. Fed rate cuts, rising crude prices due to Red Sea tensions, and a flare-up at the India-Pakistan LoC triggered foreign investor outflows. Indian equity markets corrected in February and March 2025, which smallcase managers view as a healthy pause after the sharp rally of 2023–24.
Despite these headwinds, Indian inflation stayed within the RBI’s 4–5% target. The central bank maintained its repo rate at 6.50%, prioritising macroeconomic stability.
Technical Perspective: Axis Capital
According to Axis Capital, the primary trend in Nifty remains bullish, with a consistent pattern of higher tops and bottoms. The index is currently trading above its 20-, 50-, 100-, and 200-day moving averages, reinforcing near-term bullish sentiment.
A bullish candle on the monthly chart suggests short covering at lower levels. The weekly RSI is in positive territory, indicating rising strength, it stated.
Axis expects the index to trade positively, with a short-term range of 26,100 to 24,500. Any dip toward the lower end of this band is seen as a buying opportunity.
It recommends a buy-on-dips strategy, noting that any breach below 25,200 could prompt profit booking down to 24,500. However, the broader market structure remains strong, with potential sectoral rotation playing a key role.
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.
