The Indian stock market has rebounded sharply in less than a month to 24,461.15 after witnessing its deepest slump this year. In this near one month period the Nifty 50 has surged over 10 per cent from 22,161.6 level which it fell to on April 7.
On May 5, the index closed at 24,461.15, 7 per cent off its all-time high, supported by broad-based buying across sectors and renewed investor confidence.
The rally was powered by easing global trade tensions, dovish monetary policy from the Reserve Bank of India (RBI), robust foreign institutional investment, and attractive large-cap valuations after earlier corrections. At Monday's close, the Sensex rose 294.85 points to 80,796.84, while the Nifty climbed 114.45 points.
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Sectoral Gains, But Banks Lag
Every major sector participated in the uptrend except banking. Auto, FMCG, oil & gas, power, and metals each gained around 1 per cent. Leading gainers included Adani Ports (up 6.31 per cent), Adani Enterprises, and M&M. Kotak Mahindra Bank, ONGC, and SBI were among the key laggards.
From Panic to Optimism: What Changed?
The market’s turnaround comes after a deep trough in early April, when the Nifty fell to 22,161.60 on April 7, its lowest level this year. The drop was triggered by a global sell-off after the U.S. announced fresh tariffs and China responded with countermeasures. Now, sentiment has flipped.
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"The recent market recovery was largely driven by the BFSI pack, particularly banking and NBFC stocks, following the RBI's rate cuts and liquidity infusion," said Sunny Agrawal of SBI Securities. “These moves were supported by a lower inflation print, which boosted sentiment around lenders like Bajaj Finance, ICICI Bank, HDFC Bank, and Kotak Bank.”
Global Relief Aids Recovery
Agrawal added that a pause in US-China trade hostilities and a sharp drop in the U.S. dollar index encouraged foreign fund flows into Indian equities. “The correction in crude oil prices also helped strengthen India’s macroeconomic narrative,” he noted.
"Valuations had become more attractive after the correction since October. So, a mix of global relief, policy support, and improved valuations collectively lifted the market," he said. However, Agrawal cautioned against premature euphoria: “There are key overhangs, such as unresolved US trade negotiations and muted earnings across the board. The broader earnings trend doesn't support a fresh rally yet.”
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Domestic Drivers: Policy, Earnings, and Monsoon Hopes
The RBI’s twin rate cuts, including a 25 bps cut in April that brought the repo rate to 6 per cent, injected momentum, especially in financials. The central bank also changed its stance from ‘neutral’ to ‘accommodative’, which further boosted market sentiment.
Palka Arora Chopra of Master Capital Services highlighted improved FII participation: “FIIs have turned net buyers of Indian stocks after a prolonged selling trend. This could be due to structural underweight positions in India, prompting a reversal in allocations.”
She noted that the rally’s sustainability hinges on corporate earnings: “Earnings releases will likely play a prominent role in dictating market direction, mood, and sentiment. Investors should also be mindful of U.S. policy shifts and India’s geopolitical posture.”
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According to Hardik Matalia of Choice Broking, the Nifty's breakout above 23,800 unleashed fresh momentum buying. “While the ongoing rally is robust, a short-term correction, either time-wise or price-wise, cannot be ruled out. Such a pullback would be healthy for the trend and could offer strong support-based entry opportunities.
Global Context: Trade, Tech, and Trump
Internationally, markets have welcomed a softening stance by Donald Trump on tariffs. Amar Deo Singh, Head Advisory at Angel One, pointed to additional factors behind the recovers. He says: “The Indian market’s recovery has been driven by several tailwinds, valuation comfort after the correction, value buying in key stocks like Reliance, and policy support from the RBI, including two rate cuts and a shift to an accommodative stance. These helped boost financials, especially banking stocks, which led the rally.”
Singh adds: “FIIs who had been selling are now relooking at India. Combined with expectations of an above-normal monsoon, that’s added further strength to market sentiment.”
Additionally, the impact of Trump’s tariff has been absorbed in. Singhs says: “The fear around Donald Trump’s tariff stance has been largely absorbed by the markets. Investors now see that while he's aggressive, he’s also showing readiness to negotiate, which has reduced uncertainty globally.”
India is not as deeply impacted by the US-China tariff war as some other countries, which plays to our advantage. Singh adds: “Our exports to the US are nowhere near China’s scale, so the relative impact is muted.”
