Nifty 50 turns positive in 2025; will this Indian stock market rally sustain?

The Indian stock market witnessed a robust rally on Monday, with both benchmark indices, the Sensex and Nifty 50, gaining over 1% each. This uptrend follows an impressive 4% surge recorded last week, marking a sharp recovery in equities.

The recent rally has turned the Nifty 50 positive for the year 2025, reversing five consecutive months of negative returns since October 2024. A strong rebound in the latter half of March 2025 has allowed the index to break its losing streak.

On March 24, the Sensex surged 1,201 points to reach a high of 78,107, surpassing the 78,000 mark for the first time since February 7. Meanwhile, the Nifty 50 extended its winning streak to the sixth consecutive session, surpassing the 23,700 level during intraday trade.

The Nifty 50 had declined by nearly 15% from its September 27 high of 26,277. However, the index has since recovered approximately 1,745 points from its March 4 low of 21,964.

Market Valuations

Market analysts suggest that the recent correction has made valuations of large-cap stocks attractive, triggering value buying in high-quality yet previously beaten-down stocks. The forward price-to-earnings (PE) ratio of Nifty 50 stocks has now fallen below the 10-year average, making current valuations more appealing to investors.

Stock Market Outlook

Elara Capital suggests that recent improvements in India’s macroeconomic indicators indicate that the worst phase may be over. The firm highlights key catalysts for a gradual recovery in corporate earnings, including the Reserve Bank of India's proactive approach to banking system liquidity and an increase in government expenditure.

On the global front, a softer US dollar and declining crude oil prices provide a supportive backdrop despite ongoing trade and geopolitical uncertainties. Additionally, the Indian rupee, which recently exhibited sharp weakness, appears to be stabilising. Elara Capital projects a further depreciation of 2.0-2.5% over the next three to six months.

Given this outlook, Elara Capital remains positive on domestic cyclical sectors, particularly non-banking financial companies (NBFCs), private banks, and discretionary consumer sectors where competitive advantages are strengthening, such as aviation and telecom. The firm also favours large, diversified infrastructure players and select defence manufacturers set to benefit from increased European defence spending.

Technical Outlook

From a technical perspective, the Nifty 50 faces a key resistance level at 23,700. Analysts suggest that a decisive close above this level could trigger a further rally toward 24,000.

According to Anshul Jain, Head of Research at Lakshmishree Investment and Securities, Nifty 50 has decisively breached and sustained above the swing high of 23,235, continuing its strong momentum toward the next major resistance at 23,804.

“Nifty 50 index has seen six consecutive up days and has surged 1,744 points (7.94%) in just 13 sessions, signalling a short-term overbought condition. While the trend remains bullish, profit booking is likely near 23,804. A healthy pullback from this level could provide better risk-reward opportunities for fresh entries. Traders should watch for signs of exhaustion or consolidation in the coming sessions,” Jain said.

Bajaj Broking Research remains cautious regarding the sustainability of the ongoing rally despite the advance-decline ratio (ADR) crossing 1. The ADR, which measures market breadth by comparing advancing stocks to declining stocks, reached 1.2 in March 2025 — the highest level since June 2024.

“However, there are sound doubts over the rally’s durability given FPIs have still remained net sellers of equities, having offloaded ₹15,000 in March. The current upswing could be a temporary bounce, the impact of reciprocal tariffs, set to take effect in early April remains uncertain. Charts point that markets could form a Double bottom, wherein testing a low, recovering and again revisit the low before stabilizing - a process that might take three months or longer,” Bajaj Broking Research said.

While the Indian stock market has demonstrated notable resilience, uncertainties persist. Key resistance levels, macroeconomic trends, and global factors will be critical in shaping the market's next trajectory.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.