India’s Stock Market Recovering Amid Inflation Easing and Rate Ban

Indian equity markets are stabilizing, supported by retail inflation easing to a six-year low of 2.1% and wholesale price index falling into deflation. Policy clarity, an uptick in CapEx plans, and improving monsoon forecasts have encouraged cautious re-entry by investors. Sensex and Nifty have recovered from the February crash, exhibiting structural resilience.

Sectoral rotation is unfolding. Financials and domestic consumption stocks are gaining attention as bank-led credit growth resumes. On the flip side, commodity-linked exporters remain volatile, pending global demand clarity. GCC-led service plays and select mid-cap industrials are attracting long-term flows from global funds looking to diversify off-shore allocations.

Looking ahead, momentum depends on monsoon continuation, Q2 GDP results, and corporate earnings. If macro-currents stay favorable, India may emerge from risk-off territory into selective risk-on positions. Yet, caution is warranted: the global trade environment remains fluid, and domestic policy delays could disrupt fragile confidence.