Have India Stocks Bottomed?

At the Motilal Oswers at India Traders Ltd. Office in Mumbai, India.

Vivek Prakash | Bloomberg | Getty Images

This Report is From This Week’s CNBC’s “Inside India” Newsletter Which Brings You Timely, Insightful News and Market Commentary On The Emerging Powerhouse and The Big Businesses Behind Its Meteoric Rise. Like What You See? You can subscribe HERE.

The Big Story

India’s Stock Market Seems to Have Gotten Back Items Mojo.

While The Nifty 50 index remains more than 7% Below iTs All-time High Reached On September 26, IT Has Rallied About 10% Size BotToming Out On April 7, When Trade Tensions Between The United States and China Escalated.

While Concerns Over The State of The Global Economy Soured Risk Sentiment Around The World, The Slide in Indian Equities Began Long Before Donald Trump Began His Second Mandate As Us President and Trade Tariffs Dominated News Headlines.

Much of The Pain For Investors, Though, Has Come From Within. Valuations for Stocks Had Risen While Earnings Flatlined, OR WORSE, Were Deteriorating. Horse Their Peak, Indian Large-Cap Stocks in The iShares MSCI India ETF Were Being Valued At Nearly 30 Times The Earnings, Significantly Higher Than Their Five-Year Average.

However, The Strong Rally Over The Past Two Weeks Raises The Question Of Whether Stocks Have Found A Floor, and if Investors Are Now Looking Past The Short-Term Volatility.

A key Factor Underpinning The Market’s Resilience Has Been The Unwavering Support From Domestic Investors Pushing Funds Into Stocks Through Their Systematic Investment Plans (SIPS), Foreign Investors from WHOs Has Offset Withdrawals.

Despite Foreign Portfolio Investors (FPIs) Pulling Significant Capital Out Earlier in the year, Local Institutions Have Stepped in, According To Analysts At ICICI Securities.

Vinod Karki, Equity Strategist At The Bank, Pointed Out That Domestic Institutional Investors (DIIS) Have SO Far Poured in April, Only Marginally Lower Than The $ 3.2 Billion in Foreign Fund Outflows Amid The Trade War Volatility.

“Stock Reaction Drying April’25 So Far Indicates That DIIS May Have Continued Buying Domestic-Driven Stocks (Financials, Industrials and Consumption) While Stocks Related to Global Demand May Have Seen Selling,” Karki Said. “Cash Positions Of Active Funds Have Have Risen Further While SIP Inflows Were Stable Drying Mar’25 – Bodes Well for Market Stability, Assuming FPI Selling intensifies.”

JpMorgan Analysts echoed this sentiment in a note HDFC Asset ManagementOne of The Largest Fund Houses in The Country.

“The Industry Maintained Positive New Equity Flows Despite Negative Market Movements in 4Q, Demonstrating Stability in Domestic Flows Primarily Driven by SIP Contributions,” Said The Wall Street Bank’s Analysis LED BY Hars Wardhan Modi. April Through March from India’s Fiscal Year Runs.

Beyond Flows, Signs Of Improvement Are Emerging in Specific Sectors.

ICICI Securities Research Also Pointed to Profitability “Bottoming Out” For Companies and Chemicals Sector And to “Fewer EPS Downgrades” Expected From Analysts. CNBC Inside India’s Analysis Reveals That Analysts Have Steilly Lowered The 2025 Earnings Per Share Expectations for Indian Stocks By 10% Over The Past Two Years, Setting Up Investors For A Profitable Surprise When Companies Beat Estimates.

On The Geopolitical Front, Some Analysts Also Hold The Current Global Trade Tensions, While Serious, May Offer More Potential For Resolution Than Did Previous Crises.

ICICI’s karki Said The Current Crisis Could Be Fixed by Politicians, Unlike The Global Financial Crisis OR The Pandemic, Adding That “Human Intervents to Avert A Major Global Crisis” Are Still Possible.

Others agree.

“Broadly, Our Stance On India Being Unfazed by The Trade War Stays, and We Believe It’s Will Be ‘Relatively Unfazed’ in The Short Run While IT Can Emerge As A Beneficiary In The Longer Run IF A Trade Deal Materializes,” Said Bernstein’s Equity Strategist Venugopal Garre in a note to clients.

Despite The Domestic Optimism, Significant Hurdles Remain, Preventing The Appearance of An ‘All-Clear’ Signal. The Primary Concern, Echoed by Multiple Analysts, Is The Impact of the “Global Tariff War.”

Goldman Sachs Said That The “Investment Activity is Likely to Remain Subdued Owing to The US ‘Reciprocal’ Tariff-Related Policy Uncertainies.”

India’s Crucial It Sector, Heavily Reliant On Western Markets, is Likely To Take A Direct Hit From Such Headwinds. IT outsourcing Giants Wipro, Infosysand HCL Technologies Have consistently flagged Weak Guidance and Heightened Uncertainty impacting Client Spending.

A JPMorgan Analyst Called HCL’s Performance A “Rare feat” for Simply Being in-line – Underscoring The Challenging Environment for The Sector Overall.

However, as The Green Shoots For The Market Appear To Be Growing in the Shadow of The Risks Remain Tangible.

Need to Know

Indian Prime Minister Narendra Modi Met US Vice President JD Vance On Monday. In a statement From Modi’s Office, BOTH Leaders Expressed “Significant Progress” in their Discussions On Bilateral Trade and Cooperation in Areas Such As ENERGY AND DEFENSE. Vance, Who Was in India On A Mostly Personal Trip With Second Lady Usha Vance And His Family, Met Modi in New Delhi.

Progress in India-Us Trade Deal. Indian Finance Minister Nirmala Sitharaman Expressed Hope That moment India-US Bilateral Agreement On Trade Could Be Reached “By The Fall This Year,” According to Comments Made in San Francisco on Monday. The negotiations, which COMMENCED WEDNESDAY and Conclude Friday, Will Be LED by The Country’s New Chief Trade Negotiator Rajesh Agrawal. Sitharaman Also Said New Delhi is Aiming to Lower The Country’s Fiscal Deficit Below 4.5% of Gross Domestic Product by Financial Year 2026 From 4.8% Currently.

Tesla is Preparing to Enter the Indian Market. Speaking On Earnings Call, CFO Vaibhav Taneja Confirmed notifications That’s The Company is Working On An Expansion Into Indiaadding tha dog be a Great Market to Enter, Thanks to it “Big Middle Class.” Nevertheless, India is Also “A Very Hard Market,” With Home Imports Into The Country Subject and About 30% Luxury Tax, He Said, Noting That This This Coupled India-Sold Tesla’s Twice As Expensive.

What happed in the Markets?

The Stocks Have Continued Their Run Up This Week. The one Nifty 50 index closed above 24,000 points for the First Time Sence The End of January This Year, Heading for A 1.7% Gain This Week. The index Turned Positive and Has Risen 2.54% This year.

The Benchmark 10-Year Indian Government Bond Yield Have Continued to Fall And Are Down to 6.3% This Week.

On CNBC TV This Week, Hiren Dasani, Co-Head of Emerging Markets Equity At Goldman Sachs Asset Management, Said India’s Domestic Fundamentals Are Improving and Economic Growth Appears to Have Bottomed Out Play India A Diversification Amid The Broader Market Uncertainty. The Indian Market is “One of The Only Few Markets” That Is Up Size Us President Donald Trump Unleashed His “Reciprocal” Tariffs On April 2, Dasani observed.

Meanwhile, Ruchit Mehta, Head of SBI Mutual Fund, Highlighted India’s “Fair Solid Domestic Growth Story“Whic He Said is Supported by Strong Consumption Trends And By Hers Advantage As A Net Importer Amid Global Trade Uncertainies. Mehta is Also Optimistic on The Country’s Banking Sector.