India Stocks Outlook
May extend gains next week; brief profit-taking likely
This story was originally published at 19:45 IST on 21 March 2025
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By Gopika Balasubramanium
MUMBAI – Headline indices are likely to continue their winning run to the next week owing to upbeat sentiment in the market in the near term, most analysts said. Valuations having turned fair across the board, and the rupee's appreciation against the dollar may encourage further buying momentum over the coming days, they said. However, some analysts have not ruled out the likelihood of any US tariff-related shocks that could limit the gains in the market. Some even expect brief bouts of profit-booking next week given the recent surge in the market, but they do not expect the Nifty 50 to fall below 22700 points even if such a decline occurs.
Traders covered their short positions in derivatives contracts of the Nifty 50 on Friday, which likely indicates that they have turned bullish, derivatives analysts said. This trend is expected to continue next week ahead of the expiry of the March derivatives series of the Nifty 50, they said.
The Nifty 50 may rise in the coming week, but could struggle to cross 23400 points, and may consolidate for some time if it fails, Ajit Mishra, senior vice president – technical research at Religare Broking, said. He believes a rise above 24000 points could lead to further positive momentum. Next week, any new developments about the US levying import tariffs on India could take centre stage, he said, adding that pharmaceutical stocks may see an impact. US President Donald Trump had earlier threatened hefty tariffs aimed at sectors, such as automobiles and pharmaceuticals. Investors across global markets are bracing for reciprocal tariffs, which are set to take effect Apr. 2.
Indian equities had not followed global cues in the last few days and hence, the impact of any negative tariff-linked news may be limited, Mishra said. Shares of banks, financial services providers, and oil and gas companies are better placed, he said. He expects the Nifty 50 to face resistance at 23800-24100 points and find support at 22750-23000 points.
On Friday, the Nifty 50 closed at 23350.40 points, up 159.75 points or 0.7%. Gains in heavyweight stocks ICICI Bank and Reliance Industries, which together have more than 16% weightage in the Nifty 50, led to the sharp rise of the index. The 50-stock index has closed higher in nine of the 14 trading sessions so far in March. The BSE Sensex closed at 76905.51 points, up 557.45 points or 0.7%.
When most analysts shared positive views about the market, Harsh Shah, head of research at Mumbai-based Dimensional Securities, had a slightly different opinion. "If we look at the larger picture, things are not looking great for Indian equities," Shah said, adding that valuations were still stretched. He said corporate earnings are unlikely to pick up in 2025-26 (Apr-Mar) as it would take time for demand to improve and translate to real growth. Until then, the market may see a further fall, he said. Investors are increasingly moving their investments to safer assets such as gold in an attempt to turn risk-averse, he said.
The economy is also on the path of a slowdown and the pace of growth in the near-term would not be as fast as expected, Shah said, adding that consumer spending has softened and needs time to get back. He feels the measures undertaken by the Reserve Bank of India, especially the easing of the monetary policy, to boost liquidity in the banking system, and by the government to relax income tax for the middle-class, will take at least 6-9 months to have an effect on the economy. Post this, there will be an overall recovery in the economy, thereby paving the way for better conditions in the equity market, he said. End
US$1 = INR 85.97
Edited by Tanima Banerjee
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