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India’s stock markets are poised to close March 2025 with their strongest monthly performance in six months, snapping a five-month losing streak and signaling a robust turnaround for domestic equities. The benchmark Nifty 50 surged 6.3% this month, its best advance since September 2024, while the Sensex climbed 5.8%, marking its most significant monthly gain in nine months. As of Saturday, March 29, the rally has added over ₹35 lakh crore to the market capitalization of BSE-listed firms, fueled by value buying, a revival in foreign inflows, and improving economic indicators.
A Stellar March Rally
The Nifty 50, which turned positive for the year in late March, hit a two-month high, closing above 23,500 on Friday, March 28, while the Sensex breached the 78,000 mark for the first time since January. The broader market joined the upswing, with the Nifty Smallcap 100 index soaring 9.5%—its biggest monthly jump since June 2024—and the Nifty Midcap 100 leaping 7.84%, the most since November 2023. This broad-based rally reflects renewed investor confidence after a challenging period that saw the Nifty shed nearly 10% from its December 2024 peak.
The surge began in mid-March as valuations turned attractive following months of correction. “After a prolonged sell-off, stocks were trading at reasonable levels, prompting value buying across sectors,” said Anil Rego, CEO of Right Horizons. Banking and financial stocks led the charge, with heavyweights like Kotak Mahindra Bank and HDFC Bank posting double-digit gains, while energy giants like NTPC and Reliance Industries bolstered the indices amid stable oil prices and domestic demand optimism.
Foreign Inflows Fuel the Fire
A key driver of this rally has been the return of foreign portfolio investors (FPIs), who pumped over ₹30,000 crore into Indian equities over the past six trading sessions alone. This marks a sharp reversal from earlier outflows in 2025, triggered by global uncertainties and a stronger U.S. dollar. Analysts attribute the renewed FPI interest to India’s improving macroeconomic outlook, including a narrower trade deficit of $14.05 billion in February and a drop in retail inflation to 3.61%—well below the Reserve Bank of India’s (RBI) 4% target.
Expectations of an RBI rate cut in April have further buoyed sentiment. “With inflation under control and economic growth steady at 6.5-7%, the RBI has room to ease monetary policy, which could sustain this rally into Q2,” noted Sujan Hajra, Chief Economist at Anand Rathi Shares and Stock Brokers. The anticipation of lower borrowing costs has particularly lifted rate-sensitive sectors like banking and real estate.
Sectoral Highlights and Broader Trends
Financials emerged as the standout performers, with the Nifty Bank index rising over 8% in March, its best month since July 2024. Energy and consumer goods also contributed significantly, while IT stocks lagged, reflecting global tech sector volatility amid tariff uncertainties under the new U.S. administration. Small and mid-cap stocks, often seen as proxies for domestic growth, outpaced their large-cap peers, signaling strong retail participation—evidenced by record demat account openings in February, surpassing 16 crore.
Gold, a traditional safe-haven asset, underperformed equities, gaining just 0.8% month-on-month to close at $2,834.60 per ounce, while oil prices dipped 2.9% to $74.89 per barrel, easing input cost pressures for Indian firms. Posts on X highlighted the market’s six-day winning streak—the first since September 2024—as a testament to growing bullishness, with some users predicting the Nifty could test 24,000 by mid-April if momentum holds.
Looking Ahead
Despite the exuberance, analysts caution that the rally’s sustainability hinges on global cues and domestic earnings. “March has been exceptional, but Q1 2025 earnings will be critical. Any disappointment could trigger profit-taking,” warned Deepak Jasani of HDFC Securities. Geopolitical tensions, particularly U.S.-China trade policies, and the Federal Reserve’s cautious stance on rate cuts—projecting only two in 2025—could also cap upside potential.
For now, the Indian market basks in its best monthly performance since September 2024, with the Sensex and Nifty cementing their status as Asia’s top performers for March. As trading resumes on Monday, March 31, investors will watch closely to see if this momentum carries forward or if profit-booking tempers the bulls’ run.
