Are Indian Markets Entering an Early Recovery Phase in September?
Click to start listening
Synopsis
Indian markets are showing the potential for recovery, with key indicators suggesting improved investor confidence and sectoral shifts. Despite modest gains in September, the outlook remains positive as earnings season approaches and consumer trends strengthen.
Key Takeaways
- Sign of recovery: Indian markets may be entering a recovery phase.
- Improving breadth: A rise in stocks hitting new highs indicates growing investor confidence.
- Sectoral shifts: Growth-oriented sectors are gaining traction.
- Strong earnings season: Anticipated positive trends in Q2 FY26 earnings.
- Global influences: Global market trends impact local sentiment.
New Delhi, Oct 30 (NationPress) Despite the Indian markets only achieving modest gains in September, signs indicate a potential early recovery phase, driven by improving breadth, sectoral rotation, and stable macroeconomic conditions, according to a report released on Thursday.
PL Asset Management's report highlighted that the strengthening breadth—with the proportion of stocks reaching new 12-month highs doubling from recent lows and six-month breadth readings surpassing 55 percent—indicates increasing investor confidence and a revived risk appetite.
In September, global equity markets experienced a rally, with the S&P 500 climbing 3.1 percent, the Nasdaq surging 5.1 percent, and Hong Kong’s Hang Seng soaring 7.1 percent.
In India, the Nifty 50 gained 0.75 percent, while the Nifty Midcap 150 and Smallcap 250 registered increases of 1.39 percent and 1.13 percent, respectively.
The report noted that in the Indian markets, value and high-beta stocks have outperformed, indicating a shift towards cyclical and growth-oriented sectors.
“In contrast, quality and low-volatility factors, which prevailed during the previous risk-averse phase, are now reverting to the mean. This change highlights a renewed willingness among investors to take on risk, setting the stage for potential market upside as sentiment normalizes,” stated the asset management firm.
“Indian markets are entering a robust normalization phase. Our indicators suggest that the risk appetite cycle is shifting, bolstered by resilient domestic liquidity, stable macro conditions, and early signs of earnings revival,” remarked Siddharth Vora, Head of Quant Investment Strategies and fund manager at PL Asset Management.
While short-term volatility might continue due to global influences, the medium-term outlook appears increasingly promising, he added.
PL Asset Management anticipates markets will remain range-bound yet resilient, with a positive bias fueled by the approaching Q2 FY26 earnings season and festive consumption trends.
Looking toward the medium term, the asset management firm forecasts a stronger growth cycle supported by GST-led consumption revival, potential interest rate and tax adjustments, and an upturn in corporate earnings.
Point of View
It is evident that Indian markets are on the cusp of recovery. While modest gains in September may seem underwhelming, the underlying factors such as improved breadth and stable macros suggest a constructive environment for investors. Our outlook remains cautiously optimistic as we navigate through these changing dynamics.
NationPress
25/12/2025
Frequently Asked Questions
What indicators suggest a recovery in Indian markets?
Key indicators include improving breadth, with a significant increase in stocks hitting new highs, and a shift towards cyclical sectors reflecting growing investor confidence.
How have global markets influenced Indian markets?
Global markets have experienced a rally, which has positively impacted investor sentiment in India, contributing to modest gains in the local markets.
What sectors are currently performing well in India?
Value and high-beta stocks are currently outperforming, indicating a shift towards cyclicality and growth-oriented sectors within the Indian market.
What is the outlook for the upcoming earnings season?
The upcoming Q2 FY26 earnings season is expected to provide a positive bias to the markets, driven by strong consumption patterns during the festive season.
Are there any risks to be aware of in the current market?
While the medium-term outlook is constructive, short-term volatility may persist due to ongoing global factors that could impact market performance.
