Stock Market Rebound: Indian benchmarks aligned closer to US than Asia; markets may stay sideways, but breadth signals strength, says Kunal Bothra - Markets | Latest News Updates

Indian equity markets may remain range‑bound in the near term, but improving market breadth and strong global cues are laying the groundwork for outperformance ahead, according to market expert Kunal Bothra. Speaking on market conditions, Bothra said sentiment remains constructive despite some fatigue setting in at the index level after a sharp recent recovery.

“It should be positive for the markets, even though Asian markets are looking largely flattish,” Bothra said. He pointed to the sharp rebound in US equities as a key confidence booster. “The recovery in the S&P 500 and Nasdaq to all‑time highs has been phenomenal. These indices had fallen more than 10%, and the V‑shaped recovery we’ve seen is quite spectacular.”

Highlighting the global context, he noted that the Dow Jones had corrected from around 50,500 to nearly 44,000–45,000, before recouping a meaningful portion of those losses. “That tells you markets are willing to look through short‑term geopolitical stress,” he said, adding that Indian equities are likely to take cues from global trends.

India tracking global recovery, scope for catch‑up rally

According to him, India could even outperform going forward. “There has been a huge lag and underperformance through 2024 and 2025. That gap will eventually get filled. There is a real possibility of India entering an outperformance zone now.”

Notably, foreign institutional investors (FIIs) turned buyers while domestic institutions (DIIs) booked profits. DIIs have been consistent buyers for a long time, but sold equities worth Rs 3,400 crore on Wednesday

Index fatigue, large‑cap rally losing steam

While the broader outlook remains constructive, Bothra cautioned that index‑level momentum may slow in the near term, pointing out that several heavyweight names have already seen sharp moves.

“L&T is up over 15 per cent from the lows, Reliance is not doing much, and HDFC Bank tried to show some 5–7 per cent upside but got sold into,” he noted. According to Bothra, HDFC Bank now seems to be stabilising near Rs 800, rather than returning to earlier extremes. Rs 800 looks like a pivot now, not 750, not 850.”

Midcaps, smallcaps gaining strength as breadth improves

Despite the index consolidation, Bothra remains optimistic on broader participation. “The best part of the last 7–8 sessions has been market breadth. Without doubt, it has been spectacular,” he said.

He highlighted unusually strong volume activity across several stocks. “You don’t see 5 times to 10 times volume expansion across so many stocks…unless risk appetite has genuinely returned. And we’re seeing that despite geopolitical overhangs.” This, he believes, is a sign that leadership may shift. “Large caps may be done with the first phase of the rally. Now, midcaps and smallcaps could start outperforming.”

US markets more relevant than Asian peers

On global correlation, Bothra said Indian markets appear more closely aligned with US equities than Asian peers. He noted that he would see co-relation with US markets more than Asian markets. “Over the past several sessions, Asian indices corrected while Indian markets still closed higher,” he said. He added, “Even today, with Hang Seng down nearly 1 per cent, GIFT Nifty is relatively flat. That tells you we are showing resilience versus Asia and are mirroring US price action more closely.”

(Disclaimer: The above article is meant for informational purposes only, and should not be considered as any investment advice. ET NOW DIGITAL suggests its readers/audience to consult their financial advisors before making any money related decisions.)

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