Dalal Street is experiencing high volatility, but there is good news for investors. Despite sharp fluctuations in early trade, both the Sensex and Nifty50 have shown resilience, signaling a shift from the earlier pattern of drastic declines with any hint of bad news. By mid-morning, the Sensex was up by 100 points, holding above 80,302, while the Nifty50 traded above 24,300, reflecting market stability.
This stability is particularly encouraging for retail investors, as it suggests that even on tough days, the markets may not be as punishing as before. There are emerging opportunities for smart investing, especially considering that the volatility seen earlier has not led to significant crashes.
A key factor contributing to this shift is the return of foreign portfolio investors (FPIs). Over the past nine sessions, FPIs have invested over $4.1 billion in Indian equities, marking the longest buying streak since July 2023. This influx of foreign capital is boosting market sentiment and providing support to the broader market.
Several factors are driving this rally. India remains relatively insulated from a potential global trade war, making it an attractive destination for foreign investment. Moreover, large-cap valuations in India remain appealing, and there are hopes for a quick trade deal between the U.S. and India, which could further boost market confidence. Even rising tensions with Pakistan, triggered by a militant attack in Kashmir, have not derailed the market’s optimism. Instead, investors are betting on India’s economic resilience and diplomatic maturity in handling geopolitical tensions.
Additionally, U.S. Treasury Secretary Scott Bessent’s recent comments further fueled the rally. He hinted that India could be one of the first countries to sign a new trade deal with the U.S., possibly within the week. This development is expected to provide further momentum to Indian markets.
Moreover, strong earnings reports from major companies like Reliance Industries and the shifting of investment flows from China to India have added to the positive market sentiment. The combination of these factors is driving the market rally, making investors optimistic about the outlook for the Indian economy.
However, experts urge caution. Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, warned that while the market has priced in a restrained response to the India-Pakistan tensions, uncertainty still remains. He highlighted the need for careful navigation in the near term due to the unpredictable geopolitical landscape.
In conclusion, Dalal Street is handling volatility better than before, and while there is uncertainty, the current outlook remains positive due to strong foreign inflows, India’s economic resilience, and hopes of a trade deal with the U.S. Investors should remain cautious, but the silver lining in this volatility offers encouraging prospects for the Indian stock market.
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