The decline in the stock market has been halted, know how the coming week will be

Stock Market Update: Consolidation Phase and Expert Insights

According to stock market experts, the phase of consolidation in the market may continue, and factors such as the tariff war and the fall in crude oil prices could impact market movements.

The Indian stock market has finally taken a break after a three-month decline. Last week, the market saw a strong recovery, with the Sensex and Nifty making a solid comeback, closing with gains of nearly two percent. The market improvement was driven by favorable global and domestic signals, boosting investor confidence. Nifty closed at 22,552.50, while the Sensex ended at 74,332.58, reflecting a significant jump.

Ajit Mishra, Senior Vice President at Religare Broking Ltd, said, “Global sentiment improved following reports of a delay in US tariffs and the possibility of further negotiations, which helped stabilize financial markets. In addition, a weaker dollar and falling crude oil prices boosted investor confidence.” On the domestic front, the Reserve Bank of India's (RBI) decision to inject additional liquidity into the system added to the positive momentum. “These factors led to a broad-based rally across sectors, with metals, energy, and pharmaceutical stocks gaining the most,” Mishra noted.

Krishna Appala of CapitalMind Research mentioned that the market strength was seen on the back of a broad-based recovery, with Nifty50 stabilizing near reasonable valuations, while mid- and small-caps continued to attract buying after recent corrections. "Large caps look well-positioned, with the Nifty50 P/E ratio below 20x, in line with historical norms. Corporate balance sheets remain strong, and we expect 10-12% annual earnings growth to provide stability," Appala said. The sustainability of this momentum depends on earnings recovery and broader market sentiment.

Experts suggest that while large caps are positioned well, the broader market may continue to consolidate until earnings growth picks up. The upcoming trading week will be short due to holidays, and experts caution that tariff talks, geopolitical tensions, and their impact on the US dollar and crude oil prices will affect market trends. As such, investors are advised to maintain a positive but cautious stance.

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