Stock market sentiment likely to remain constructive after October’s sharp rally: analysts

Stock market sentiment is likely to remain optimistic going forward, although some consolidation cannot be ruled out following the recent sharp rally in benchmarks, analysts said. According to experts, the Nifty and Sensex could indeed move to fresh record highs before the end of the year if global cues remain supportive, crude oil prices remain favorable and there is continued momentum for domestic gains.

The 30-share BSE Sensex rose 3,671.09 points or 4.57 percent in October, while the 50-share NSE Nifty rose 1,111 points or 4.51 percent. Both benchmark indices hit 52-week highs on October 23.’The sharp recovery in October was driven by a combination of strong corporate earnings, steady inflows from foreign institutional investors, a easing in global bond yields and optimism about rate cuts in 2025.

“Going forward, market sentiment is likely to remain constructive, although some consolidation cannot be ruled out following the recent upward move,” said Pravesh Gour, Senior Technical Analyst at Swastika Investmart. He added that since valuations are now on the higher side, investors may witness bouts of volatility and sector rotation rather than a broad-based rally.

Foreign investors turned net buyers in October with a net infusion of Rs 14,610 crore after withdrawing money for three months in a row. Siddhartha Khemka, Head of Research, Wealth Management, Motilal Oswal Financial Services Ltd, said: “Going forward, markets are likely to continue to show a positive bias as investors keep an eye on global developments and foreign fund flows… Resilient domestic fundamentals continue to provide support even as external uncertainties may limit the short-term upside.” Festive seasonal demand in consumer-led sectors and heavy buying by FII and DII (Domestic Institutional Investors) last month also contributed to the bullish trend in the markets, an expert said.

Swapnil Aggarwal, director of VSRK Capital, an asset management firm, said, “The rise of over 4.5 per cent in both the Sensex and the Nifty last month was mainly driven by improved market sentiment following the government’s recent GST reforms.”

Top automakers led by Maruti Suzuki, Mahindra & Mahindra, Tata Motors Passenger Vehicles and Kia India reported record sales in the domestic market in October, thanks to festive demand boosted by the GST rate cut.

Other manufacturers such as Skoda Auto India and Toyota Kirloskar Motor also posted impressive sales growth in October.

When asked how hopeful he is that the domestic market will end 2025 on a positive note, Gour said: “Yes, there is good reason to be optimistic that the domestic market will end 2025 on a positive note.”

India’s economic fundamentals remain strong, supported by steady GDP growth, healthy corporate profits and robust infrastructure spending, he noted.

“The government’s continued focus on production, capital expenditure and policy stability is likely to support investor confidence,” Gour added.