With state elections over, Indian stock market heads for stability

Most of the state elections are now over, and the market may find stability as government spending will improve in the coming months to meet the FY25 capex target, market experts said on Saturday. The Indian benchmark indices recouped the current week's losses on Friday with a strong bounce back as investors used the bargain opportunity to accumulate beaten-down stocks.

Sensex closed at 79,117.11 this week after gaining 1,961.32 points, or 2.54 per cent, and Nifty closed at 23,907.25 with a gain of 557.35 points, or 2.39 per cent. The rally in financial stocks and strong US labour market data were among the factors that drove the Sensex and Nifty up more than 2 per cent.

A rally in blue-chip bank stocks also helped the benchmark indices jump in Friday's trade.

“Many of the blue chips are available at below-average valuations, while meaningful corrections in mid- and small-cap indices provide an opportunity for broad-based momentum,” said experts.

Sectors like realty, FMCG, auto, consumption, banks, and IT gained more than 2 per cent
According to Krishna Appala from Capitalmind Research, opportunities exist in specific sectors and broader themes that hold long-term potential, particularly in areas that have experienced significant price adjustments but remain fundamentally strong.

“Investors are cautiously adding to positions in areas that offer greater clarity on earnings visibility, especially where the longer-term structural story remains intact. While patience is essential, the sector's adjusted valuations make it an area worth monitoring closely,” Appala maintained.

In the broader market, corrections are creating opportunities to accumulate quality stocks with strong fundamentals and resilience to macroeconomic pressures.

Despite global challenges, India's long-term growth story remains compelling.

"Investors should focus on sectors aligned with structural themes such as urbanisation, infrastructure, and consumption growth. Strategic portfolio adjustments, disciplined investing, and a long-term perspective are critical to navigating the current environment," said experts.

On Friday, all sectoral indices ended in the green with Nifty IT surging over 3 per cent. Buying emerged at lower levels in blue-chip stocks causing several index heavy-weights to gain significantly.

"On Monday, the market will react to the outcome of state assembly elections in Maharashtra and Jharkhand along with other global triggers including developments in the Russia-Ukraine war," said Siddhartha Khemka, Head - Research, Wealth Management, Motilal Oswal Financial Services Ltd.