After a sharp recovery in March, the Indian stock market is entering April with renewed optimism. Historically, April has been a favorable month for equities, particularly for the Nifty 50 and midcap stocks. Several factors, including foreign institutional investor (FII) buying, attractive valuations, and robust economic growth, are contributing to the positive sentiment. However, risks such as global market uncertainties and potential trade policy changes remain.

This article explores the historical trends, sectoral performance, and expert opinions to assess whether the market rally will continue in April.

March Recovery : A Rebound After Five-Month Decline

March 2025 was a turning point for the Indian stock market. The Nifty 50 surged by 6.3%, marking its strongest monthly gain in 15 months and breaking a five-month losing streak. This rally was driven by a combination of valuation comfort, renewed FII interest, and improving economic indicators.

One of the biggest drivers of this recovery was foreign institutional investors (FIIs), who turned net buyers in the cash segment, purchasing Indian equities worth ₹6,367 crore by March 27. The market’s resilience was also evident despite global headwinds, such as Donald Trump’s threats of reciprocal tariffs on major trading partners, including India.

According to Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments, the return of FIIs has strengthened market confidence, helping bulls take control. Similarly, Chokkalingam G, Founder of Equinomics Research, believes that the worst is over for Indian equities and that the first quarter of FY26 will be robust.

Historical Performance : What April Trends Indicate

A 10-year analysis of the Nifty 50 index suggests that April has been a seasonally strong month for the Indian stock market. According to a study by JM Financial:

• The Nifty 50 has closed in the green in seven of the last ten years, delivering an average return of 2.4% and a median return of 1.3%.

• The best performances in April were in 2018 and 2020, when the index surged close to 5%, driven by post-COVID recovery and positive earnings momentum.

• The Nifty Midcap index has been even stronger, closing positive in eight out of the last ten years.

• The Nifty Midcap index has outperformed Nifty 50 on nine occasions, with an average return of 4% and a median return of 4.3%.

This historical trend supports the bullish outlook for April, as the market enters the new financial year with renewed momentum.

Sectoral Performance : Where Are the Opportunities ?

Different sectors have exhibited varying performance trends in April. Based on historical data, the strongest sectors during this month include :

Metals : Closed positive on eight occasions with an average return of 7%.

Automobiles : Positive in eight out of ten years, averaging 4.9%.

Energy : Gained on eight occasions, averaging 4.6%.

CPSE (Public Sector Enterprises) – Positive on eight occasions, averaging 3.6%.

Banking & FMCG : Positive in seven out of ten years, averaging 3.4% and 2%, respectively.

Sector to Watch : IT Under Pressure

Unlike other sectors, the technology index has struggled in April. It has closed negative in seven out of the last ten years, delivering an average return of -1%. Given global recessionary concerns and interest rate uncertainties in the U.S., IT stocks may continue to underperform in April.

Macroeconomic Tailwinds : Economic Growth and Valuation Comfort

Several fundamental factors are fueling the optimism for Indian equities :

1. Attractive Valuations Driving Midcap and Small-Cap Buying

• Some midcap and small-cap stocks witnessed a 30-40% correction in recent months, easing valuation concerns.

• As a result, investors are engaging in bottom fishing, accumulating quality stocks at discounted prices.

  
  

2. Indian Economy’s Growth Story

• India’s economy showed significant improvement in Q3 FY25, adding to the bullish sentiment.

• Morgan Stanley projects India to be the third-largest economy by 2028, growing from $3.5 trillion to $4.7 trillion by 2026.

• The rising domestic consumption and government-led infrastructure push are expected to further drive growth.

  
  

3. Foreign Investors Returning

• With macroeconomic stability and strong corporate earnings, foreign portfolio investors (FPIs) are making a comeback.

• Despite global uncertainties, FIIs have been net buyers in March, a trend that could extend into April.

Global Risks : What Could Derail the Rally ?

While the outlook for April remains positive, some key risks could dampen the rally :

1. U.S. Market Trends and Interest Rates

   • The 10-year U.S. Treasury yield is peaking, which could impact global liquidity flows.

   • If U.S. markets weaken, it could lead to temporary corrections in Indian equities.

2. Trump’s Trade Policy

   • Donald Trump’s threat of reciprocal tariffs could disrupt India’s export-driven sectors, especially IT and pharmaceuticals.

   • Any major tariff announcement could create short-term volatility in the market.

3. Geopolitical Uncertainties

   • Global tensions, especially related to Russia-Ukraine and China-Taiwan conflicts, remain potential risks.

   • Any escalation could lead to temporary FII outflows from emerging markets like India.

     
     

Conclusion : Will the Rally Continue ?

The Indian stock market enters April with strong momentum after a stellar March performance. Historical trends favor an extended rally, especially for midcap stocks and key sectors like metals, automobiles, and energy. The return of foreign institutional investors, coupled with attractive valuations and strong economic growth, further strengthens the bullish case.

However, global risks, particularly related to U.S. interest rates and trade policies, remain a concern. Investors should watch for any major policy shifts that could impact FII inflows and sectoral performance.

Outlook for April : Cautiously Optimistic

• Upside Potential : Historical trends and economic fundamentals support a continued rally.

• Key Watchpoints : Global interest rates, Trump’s tariff policies, and geopolitical developments.

• Sector Focus : Favorable sectors include metals, autos, energy, and midcaps, while IT remains under pressure.

As the financial year 2025-26 begins, investors should stay selective and disciplined, focusing on fundamentally strong companies while keeping an eye on global macroeconomic trends. If history is any guide, April could indeed be another rewarding month for Indian equities.