Nifty 50 Rebounds 17% From April Lows: Events That Contributed To The Recovery Rally In Q1 FY26

The benchmark Nifty 50 index has bounced back over 17 per cent from its April lows, led by a mix of supportive domestic policy measures, easing global trade and geopolitical tensions, and improved investor sentiment. After facing five consecutive months of hammering, between October 2024 and February 2025, the Nifty 50 has seen a strong recovery, registering its fourth straight month of gains since March.

On June 30, the index briefly touched an intra-day high of 25,669.35 before settling at 25,517.05. From this level, it is just a couple of hundred points shy of its all-time high of 26,277.35, logged on September 27, 2024.

Now, as the index approaches this important resistance level, markets stand at a crossroads – whether it can sustain the momentum and surpass its record high, or face fresh volatility ahead, especially at a time when the market is witnessing massive upheavals in geopolitics. But before we figure out that, let us look at the timeline of events that shaped this resurgence in the benchmark index.

Says Ajit Mishra, senior vice president, research, Religare Broking: “The Nifty 50 rebounded sharply over the past three months, supported by a combination of favourable macroeconomic and microeconomic factors. Easing inflation, the Reserve Bank of India’s (RBI) surprise 50 basis point (bps) rate cut, along with a liquidity boost, lifted overall sentiment. This came on the back of a strong Q4 gross domestic product (GDP), a steady rupee, and healthy foreign exchange reserves.”

Mishra added, “A revival in foreign inflows, driven by improved global risk appetite, also supported the rally. On the micro front, better-than-expected Q4 earnings and an optimistic corporate outlook reinforced investor confidence. Additionally, rising retail participation and sustained domestic inflows made the rally broad-based and fundamentally resilient.”

A Timeline of Events

Trump Tariff Announcement (April 2): US President Donald Trump announced reciprocal tariffs on imported essential goods, aiming to respond to what he called “unfair taxes” on American products by several countries, including India. This announcement triggered concerns about escalating trade tensions, especially between the US and its trading partners, and raised wider concerns of a potential slowdown in the global economy. This very event bogged down the domestic market, and the Nifty 50 slipped to its 52-week low of 21,743.65 over the week.

RBI Cuts Repo Rate (April 9): The RBI’s monetary policy committee (MPC) announced a 25 bps cut in repo rate, bringing it down to 6 per cent, while changing its stance to ‘accommodative’ from ‘neutral’. 

The change in policy stance signalled that the RBI is open to further rate cuts if needed to support growth.

Market participants perceived this move as growth-friendly during a time when global uncertainties, such as the US tariff threats had dented investor confidence.

90-Day Tariff Pause (April 9): Trump announced a 90-day pause on the tariffs he had previously imposed on its trading partners, except China. China continued to face 145 per cent tariffs on US exports. The pause eased fears of a wider trade conflict and a potential global economic slowdown, bringing the much-needed relief to investor sentiment.

With trade tensions easing, foreign institutional investors (FIIs) started returning, gradually increasing their inflows into Indian equities.

Q4 Earnings (April 10 Onwards): India Inc. saw a modest recovery in Q4FY25 as Nifty 50 and Nifty 500 companies posted revenue growth of 6.40 per cent and 5.70 per cent year-on-year (YoY), according to NSE Market Pulse for June 2025.

Operating performance was stronger. Earnings before interest tax depreciation and amortisation (ebitda) grew 8.50 per cent (for Nifty 50 companies) and 9.40 per cent (for Nifty 500 companies) in Q4 FY 24-25.

Profit growth was mixed. Nifty 50 profits after tax (PAT) rose just 0.80 per cent in Q4, while PAT margins reached a multi-year high of 12 per cent, according to NSE Market Pulse. Q4 earnings were mixed and it had mixed reactions to overall investor sentiment.

Pahalgam Terror Attack and Operation Sindoor (April 22-May 7): The Pahalgam terror attack, which claimed the lives of 26 tourists, shook the nation. In response, Indian armed forces launched precision airstrikes on nine terrorist hideouts across Pakistan and Pakistan-occupied Kashmir (PoK). What followed was a tense four-day military standoff between India and Pakistan. While the escalation triggered anxiety among investors and introduced fresh uncertainty into the markets, India’s equities remained surprisingly resilient.

Above-Normal Monsoon: Meanwhile, the above-normal monsoon this year and early kharif sowing kept supporting investor sentiment.

According to the India Meteorological Department (IMD), India recorded 126.70 mm of rainfall in May 2025, 106 per cent above the long-period average of 61.40 mm. It was the wettest May since 1901.

US-UK Trade Deal (May 8): The US and the UK signed a trade pact which reduced tariffs on some imports, including luxury cars. Markets globally, including India, reacted positively to this development.

India-Pakistan Ceasefire (May 10): India and Pakistan agreed to a ceasefire after a four-day intense battle. This eased geopolitical tensions in the region, which influenced investor sentiment in a positive way, eventually leading to a rally in the market.

Trump Retreats From China Tariffs (May 12): The Trump administration revoked the steep 145 per cent tariff on China, reducing the duties to 30 per cent. In response, China also dropped the 125 per cent tariffs on US, bringing it down to 10 per cent.

This development brought a major relief to global markets, including India, easing concerns of a full-blown trade war between the two largest economies, thereby calming investor nerves and lifting market sentiment across sectors.

Moderation in April Inflation (May 13): According to data released by the Ministry of Statistics and Programme Implementation (MOSPI), consumer price index (CPI) inflation came in at 3.16 per cent for April, down from 3.34 per cent in March. Inflation remained below RBI’s 4 per cent target for the third consecutive month, as food prices grew at a slower pace.

This opened up room for the RBI to go for more interest rate cuts. This macro data further lifted investor sentiment.

India-US Trade Deal Optimism (May 15): Trump hinted that the trade talk with India is going in a positive direction. This announcement immediately listed investor sentiment. As a result, the Sensex surged nearly 1,200 points and the Nifty 50 crossed the psychological 25,000 mark.

Rising Bond Yields: Meanwhile, India’s market stayed under pressure as rising US Treasury yields weighed on investor sentiment. When bond yields rise, typically, investors start fleeing from riskier equities to safer bonds. At the same time, when US Treasury yields were rising, India’s government securities (G-secs) yields were declining, narrowing the spread between the two. This made Indian debt a little less attractive for foreign investors, which led foreign investors to sell Indian debt assets.

Record FII Inflows (May 31): At the close of May, FIIs infused Rs 19,860 crore into Indian equity market, the highest monthly inflow this year.

RBI Cuts Repo Rate (June 9): While the market had already priced in a 25 bps rate cut, investors were in for a surprise when RBI MPC announced a 50 bps cut in repo rate, bringing it down to 5.50 per cent. Lower repo rate means lower borrowing costs, which is anticipated to encourage consumers to spend more, thereby boosting economic growth. This expectation further helped in lifting the mood of the market.

Israel Attacks Iran (June 13): Israel launched a barrage of missiles at Iran’s nuclear facilities. The attack was seen as a direct attempt to cripple Iran’s nuclear programme. It drew an immediate response from Iran, attacking Israeli military bases and important cities.

The sudden escalation caused a sharp spike in crude oil prices, which surged by 13–14 per cent almost overnight, triggering fresh concerns about supply disruptions in an already fragile global energy market. For India, which imports the majority of its oil, this raised concern over rising inflation, which weighed heavily on investor sentiment in the days that followed.

US Strikes Iran and Ceasefire (June 23-24): After repeatedly vouching for a diplomatic solution to the Iran-Israel conflict, Trump announced that the US had carried out airstrikes on three of the key Iranian nuclear facilities with its B2 bombers. The airstrikes immediately raised fears of further escalation in the Iran-Israel war. India’s market closed the day in red.

Later in the day, Trump announced a ceasefire between the two warring nations, and markets digested it quite positively, as it eased concerns of a wider conflict in the region, and softened crude oil prices, bringing it below the pre-war level.

Trump-Powell Feud: Meanwhile, Trump had been upfront in his criticism over US Federal Reserve Chair Jerome Powell’s decision to not cut rates. Trump had been pressuring Powell to cut interest rates for quite a while. However, Powell is of the view that the Trump administration’s tariffs could trigger not just a one-time jump in prices, but also pose a risk of more long-term inflation. Given that concern, Powell said the US Fed was treading cautiously before making any decisions on any further rate cuts.

Recent reports indicate that Trump wants to remove Powell well before his term ends in May 2026. Powell, being replaced with a shadow Fed Chair, would mean interest rate cuts happening soon.

US Trade Talks: Amid all this, the US has been holding trade talks with around 18 of its key partners, including India. So far, reports suggest that the negotiations are moving in a positive direction. With the 90-day pause on tariffs set to expire on July 8, there’s been no official word on an extension yet. Markets have remained relatively calm, as fears of an immediate tariff tensions have eased and major geopolitical tensions appear to have subsided, at least for now.