The Indian stock market has showcased remarkable resilience, maintaining its positive trajectory for the second consecutive month in April and establishing itself as Asia’s standout equity market. Despite escalating tensions with neighboring Pakistan, investor confidence remained robust, prompting many to increase their stock investments. The Nifty 50 index concluded April with a 3.46% gain, building on a 6.30% rise from March, while the Sensex posted a 3.2% increase, following a 6% jump the month before. Notably, both indices have rebounded approximately 12% since their lows on April 7.

Broader Market Performance

The broader market indices performed even better, with the Nifty Midcap 100 and Nifty Smallcap 100 indices soaring 15.24% and 17%, respectively, from their April 7 lows. Both indices wrapped up the month with gains of up to 4.7%.

• Top Sector Performers:
  • Nifty Bank: +6.83%
  • Nifty Oil & Gas: +4% to +6%
  • Nifty FMCG
  • Nifty Auto
  • Nifty PSU Bank
  • Nifty Consumer Durables
  • Nifty Realty

Factors Fueling Market Growth

Investor sentiment shifted favorably towards domestic sectors such as banking and FMCG amid ongoing global trade uncertainties. Several factors contributed to this bullish outlook:

• Improved Liquidity: Enhanced liquidity conditions supported market growth.
• Rate Cuts by RBI: Multiple rate reductions by the Reserve Bank of India (RBI) further bolstered investor confidence.
• Trade Talks with the U.S.: Positive momentum in trade discussions with the United States also played a pivotal role.

Additionally, attractive valuations drew value-focused investors, resulting in significant rebounds in previously underperforming stocks. The temporary suspension of 26% reciprocal tariffs by U.S. President Donald Trump earlier this month provided a significant boost to export-reliant sectors like chemicals, textiles, technology, and auto components.

Progress in U.S.-India Trade Relations

India and the United States are making noteworthy strides toward a bilateral trade agreement. Recently, President Trump expressed optimism regarding the ongoing negotiations, suggesting that a deal on tariffs may soon be reached. This is particularly significant given that the U.S. is India’s largest trading partner, with bilateral trade exceeding $118 billion in 2023–24. India aims to double this figure to $500 billion by 2030.

While global brokerage firms have adjusted their growth forecasts for the Indian economy due to potential trade impacts, they remain optimistic about the country’s economic fundamentals, citing strong domestic demand, favorable demographics, and structural reforms.

Revival of Foreign Investment

After a period of net selling, foreign institutional investors (FIIs) are returning to the Indian stock market, encouraged by the belief that a domestically driven economy can weather the ongoing global trade tensions more effectively than many peers.

• Recent Investment Trends:
  • April 15-30: Net buyers with an inflow of ₹37,400 crore into Indian equities.
  • March 20-27: Acquired ₹32,576 crore in stocks.
  • Previous months saw significant outflows, including ₹34,574 crore in February and ₹78,027 crore in January.

As of the end of March 2025, FII equity assets under custody reached ₹66.8 trillion, reflecting a 7% increase from February.

Outlook for May

Looking ahead, domestic brokerage firm JM Financial suggests that historical trends indicate the Nifty 50 typically performs well in May. Over the past decade, the index has posted gains in six out of ten years, averaging a 1.5% return.

• Nifty Midcap Index: Similar trends observed, with six positive years and an average return of 0.4%.

This analysis underscores the potential for continued upward momentum in the Indian stock market as investors remain optimistic despite global uncertainties.

Conclusion

As the Indian stock market navigates through political and economic challenges, its strong performance and investor confidence suggest a promising outlook for the coming months. With key sectors leading the charge and foreign investments returning, all eyes will be on how the market evolves in May and beyond.