The Nifty50 index has climbed 9% this month, while mid-cap stocks have gained 13% and small-cap stocks have jumped 15%. This marks one of the quickest comebacks for Indian shares in recent years. Investors who purchased during the March downturn are now enjoying rapid returns, while those who stayed out, anticipating a steeper fall, have missed the upswing amid escalating tensions involving Iranian attacks.
With mixed signals from U.S. President Trump and Iran regarding peace efforts and access to the Strait of Hormuz, cautious investors hope for another chance to enter the market. As a temporary truce ends on Tuesday, renewed conflict in the Middle East might create the dip they seek. However, current indicators suggest otherwise.
“The market has shifted to a pattern of buying during declines, and negative news about potential conflicts is not affecting prices,” noted CA Rudramurthy BV, managing director at Vachana Investments. He predicts the Nifty could reach 24,800 to 25,000 and advises against betting on a downturn at this stage.
This upturn follows the Nifty50 breaking a four-month slide in March 2026, an event that has happened only seven times in the index’s history on a monthly basis. The swift, widespread recovery has been fueled mainly by purchases from individual and high-net-worth investors, with foreign institutional investor sales tapering off.
“Last week’s advance was driven primarily by retail and high-net-worth participants who viewed the market as undervalued,” explained market analyst Sunil Subramaniam. He observed that foreign investors started buying modestly by week’s end. Domestic institutional investors have been taking gains, preparing reserves for the upcoming earnings period. “They plan to invest again once earnings details emerge,” he added.
Subramaniam views oil prices at $95 as challenging but stable, with much of the adverse news already reflected in valuations. “This appears to be near a market low, barring a major military escalation,” he said, noting that U.S. ground involvement remains unlikely, though possible under Trump.
Manish Gunwani from Bandhan AMC highlighted appealing valuations across many areas. “We are investing cash widely,” he stated, focusing on private banks and sectors with stagnant stock prices despite profit increases over recent years. He emphasized that the key issue for India is competing globally in the AI sector for international funds.
Analysts indicate that short-term trends depend on Middle East peace progress, oil staying under $100, and foreign investment patterns. Reduced tensions could alleviate inflation and currency issues, boosting appeal for India’s import-dependent economy. Fourth-quarter results and fiscal year 2027 outlooks will influence leading sectors.
For those entering late, Subramaniam recommends gradual purchases: “Invest incrementally over time, not all at once.” The current environment calls for measured approaches.
(The recommendations, suggestions, views, and opinions expressed by experts are their own and do not reflect those of The Economic Times.)
