Stock market’s bull run: What could happen next in a rally led by heavyweights

However, 13 of the Nifty 50 stocks have fallen over the last year, while eight others have only risen in single digits. IT and power stocks have been the worst performers, while fast moving consumer goods such as Hindustan Unilever and ITC have also declined.

Meanwhile, shares of smaller stocks have underperformed those of the top 50. While the 7 per cent rise in the Nifty Midcap 100 over the past year falls a bit short of the 8 per cent gain posted by the Nifty 50, the Nifty Smallcap 100 is down 5 per cent.

Mid- and small-cap stocks are considered high-risk, high-reward and are expected to provide higher returns than Nifty 50 stocks when sentiment is positive.

What next for the stock market

While some concerns of potential global shocks remain, most market experts believe cues from macroeconomic fundamentals and corporate earnings suggest the stock market is in a good position to keep moving higher in the near term. Ajit Mishra, Senior Vice President of research at Religare Broking, sees the Nifty 50 reaching 27000 points in the next three months provided there are no new negative developments. On Tuesday, the Nifty 50 ended at 26032.20 points, having hit a fresh high of 26325.80 on Monday.

Narendra Solanki, head of fundamental research (investment services) at Anand Rathi Shares and Stock Brokers, also echoed similar views. Solanki expects corporate earnings to be robust over the next 3-4 quarters after recovering from a slow start to 2025-26. While Mishra of Religare Broking was more cautious, he too expects the second half of the year to be better on the earnings front.

A potential interest rate cut by the Reserve Bank of India (RBI) later this week could be another positive for the stock market. The central bank’s Monetary Policy Committee (MPC) has already cut the policy repo rate by 100 basis points (bps) so far in 2025. With inflation at record lows, several market participants expect another 25 bps cut this week although GDP growth unexpectedly rising to 8.2 per cent in July-September have tempered some expectations and made predicting the MPC’s decision difficult.

A lower repo rate is a plus for corporates and consumers as it can reduce the cost of borrowing and lead to higher economic growth.

Another plus is the good rainfall across the country, which is seen as favourable for the rural economy. Further encouraging cues could come from any positive developments on the external front in terms of India’s discussions with the US over a free trade agreement.

The concerns

For experts, the biggest risks relate to geopolitical events that can disrupt companies’ supply chains and hamper their operations.

Another concern is the Indian rupee’s weakness, which hit a fresh record low of 89.95 against the US dollar on Tuesday. Foreign investors have pulled out nearly $17 billion from the domestic stock market so far in 2025 and continued weakness in the rupee may spark further outflows.

A weaker rupee hurts foreign investors’ returns on their Indian investments.

Despite the risks, market experts remain constructive on Indian stocks, especially domestic-driven companies from sectors such as automobiles, healthcare, banking, cement, and consumer discretionary as they could be more resilient in the face of any negative global or geopolitical developments. Finally, analysts see a few export-driven sectors such as textiles, aquaculture, and seafood processing possibly gaining in case of a favourable US trade deal.