Will Indian stock market rally continue in April? What 10-year history suggests

Stock market outlook: A sharp recovery in the Indian stock market in March, led by valuation comfort, return of foreign institutional buying and improvement in economic growth, has raised hopes that the trend could extend into the month of April.

If past trends are anything to go by, then there is a strong possibility that Nifty 50 could gain next month, which will also mark the start of a new financial year.

Nifty Historical Trend

The last 10-year analysis for the Nifty 50 index shows that the index has shown a positive price seasonality in the month of April. A study by JM Financial indicated that the index has closed in the green on seven out of the last ten occasions, yielding an average return of 2.4% and a median return of 1.3%.

Barring 2015, 2021 and 2022, the Indian benchmark index’s trend has been strong in April. In 2018 and 2020 (post-Covid recovery), the returns were the highest, close to 5%.

The broader market has exhibited an even stronger trend in the month of April, with the index rising in eight out of the last 10 years. Nifty Midcap index has managed to outperform Nifty on nine occasions as well, with an average outperformance of 1.6%.

Nifty Midcap index also delivered an average return of 4% and a median return of 4.3% in April, according to JM Financial report.

Sectoral Trend

On the sectoral front, Metals, Auto, Energy and CPSE indices have closed in the green on eight occasions each with an average return of 7%, 4.9%, 4.6% and 3.6%, respectively. Banks and FMCG indices have closed in the green on seven occasions each, with an average return of 3.4% and 2%, respectively.

On the other hand, the technology index has closed in the red on seven occasions with an average return of -1%.

Stock Market Outlook

Several analysts believe that the bullish trend visible in March is expected to stay. The index has rebounded over 6% this month after five consecutive months of decline, bringing an end to the worst losing streak in 1996.

The market’s resilience, despite Trump’s reciprocal tariff threats, comes from the renewed buying by FIIs and the confidence this has given to the bulls, said Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments.

Echoing bullish views on the Indian market, Chokkalingam G, Founder, Equinomics Research, said the worst is over and the first quarter of FY26 will be very robust.

This trend, Chokkalingam believes, will be driven by valuations becoming appealing, especially in the small-cap and mid-cap segments. The 30-40% crash in some stocks has eased valuation concerns, sparking bottom fishing by investors.

Moreover, improvement in the economic growth in Q3 is also adding to the bullish sentiments. Morgan Stanley, in its recent report, predicted the Indian economy will be the third-largest in the world by 2028. It projected the Indian economy to grow from $3.5 trillion to $4.7 trillion in 2026.

These factors will also make FPIs come back in a meaningful way, he added. They have turned into net buyers of Indian stocks for this month in the cash segment. Till March 27, FPIs have lapped up Indian stocks worth ₹6,367 crore in March.

The bears are currently on the back foot, and this market construct may continue unless Trump announces something very nasty, Vijaykumar added, reinforcing the possibility of the strong gains in April.

Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.