​India’s $489 Billion Equity Rally Rekindles Global Investor Confidence

After gaining around $489 billion in market capitalisation in a little over one month, India's equity markets have witnessed a remarkable recovery. This rally is rekindling global investor interest, reversing the tide of foreign outflows, and catapulting India into star status among emerging markets.​

Foreign Portfolio Investors Return

After withdrawing for a time, the FPIs have once again plunged into India with full vigour. In the last nine trading sessions, FPIs have invested around $4.11 billion in the Indian equity market, marking one of the longest buying streaks since July 2023. With this buying spree, the Nifty 50 index is up 6.6%, reflecting investors' renewed interest in the Indian economy's economic prospects.

Invest in Indian Markets and Unlock Future Potential With 5paisa!

Open Account Now

Economic Optimism and Trade Prospects

A number of the factors behind renewed investor enthusiasm include strong prospects for the Indian economy, which is projected to grow faster than the U.S. and Chinese economies. Besides, speculation about a potential U.S.-India trade agreement has further strengthened market sentiments. U.S. Treasury Secretary Scott Bessent recently expressed his perception that a bilateral trade deal could be finalised within a week, and as a result, market expectations have been significantly bolstered. ​

Market Performance Highlights

The Nifty 50 index rose by 0.28% on April 29 to finish at 24,394.6, while the BSE Sensex climbed by 0.29% to end at 80,445. Broader indices also made gains, with midcap and smallcap stocks gaining 1.1% and 1.3%, respectively. Auto parts companies like Samvardhana Motherson Group and Sona BLW are rallying 3% on expectations of reduced U.S. auto tariffs, with Bharat Forge gaining 2.5%. Reliance Industries maintained its upward momentum, adding 1.4% after a 5.3% rally the day before due to strong quarterly earnings. ​

Currency Strengthens Amid Inflows

Apart from this, the Indian rupee also received its share of blessings from the equity market rally. It could finally close on April 28 with 85.03 per U.S. dollar, making it the currency's strongest performance in more than two weeks. An increase in foreign portfolio investment inflows and strong market performance have attracted this currency appreciation. Decreasing geopolitical tensions and unwinding long USD/INR positions further strengthen this currency. ​

Shift Towards Domestic Sectors

The present-day investment outlook in India is embroiled as it is in a world full of uncertainty in economies and trade wars, and it has turned towards domestic sectors that do not depend on exports. Fund managers now view financials, consumer staples, defence, and healthcare as viable participation sectors, given their ability to withstand market turmoil. Financials, for example, have shot up by 12% in 2025. Hindustan Unilever, ITC, and Nestlé, consumer stocks, gained between 9% and 11% after March on positive sentiment arising from tax and rate cuts. ​

Global Recognition of India's Market

India's equity market is now receiving favourable attention internationally for its consistent outperformance. HSBC Global Research stated that India outperformed other emerging markets for 15 years in the last 20 and developed markets in 14 years, calling the local equity market "like no other." In the past 20 years, the Financial Times Stock Exchange (FTSE) India Index has achieved an 11% compound annual growth rate in dollar terms.

Outlook and Considerations

This new rally has revived the interest of investors, but analysts have warned that the more things change, the more they will always remain the same. The market is susceptible to changing global economic scenarios and any geopolitical shifts that may arise. Critical factors determining whether the rally will continue further include the finalisation of the U.S.-India trade deal and the ongoing corporate earnings. Investors need to keep their eyes open and consider sectoral shifts and macroeconomic indicators before making such investment decisions.