Indian stock markets reverse 2025 losses! Bulls party as foreign investors return to D-Street – but is the rally sustainable?

Indian stock markets have reversed the 2025 losses in the final six buying and selling classes. While BSE Sensex is marginally down from its December-end closing, Nifty50 has turned optimistic for the calendar 12 months 2025. Stock market investors’ wealth has risen by Rs 27.10 lakh crore in the final six buying and selling classes to Rs 4,18,29,351.91 crore ($4.87 trillion).
Since March 17, BSE Sensex has risen over 5.6% or 4,302.47 factors, whereas the broader 50-share index Nifty50 has additionally rallied over 5.6% or 1,261.15 factors. To put issues in perspective, BSE Sensex plunged 5.55% in February and 0.81% in January this 12 months. In March this 12 months, Sensex has risen 6.53% to this point.

Nifty50 Turns Positive For 2025

Amidst international turmoil and India’s GDP progress slowdown and tight liquidity situations, Indian stock markets had been bleeding. Foreign investors had been promoting shares relentlessly, and for now that pattern appears to have reversed. But is the present stock market rally sustainable? Are foreign investors conclusively again on D-Street? Here’s why market consultants are cautious:
Stock market rise in numbers:

Foreign investors again on D-Street – but is the rally sustainable?
Market consultants say that the stock market rally is pushed by bettering financial fundamentals – GDP progress seems to be again on monitor, earnings are anticipated to enhance, inflation is cooling, and RBI is anticipated to minimize charges additional in the April coverage evaluate, therefore offering a a lot-wanted liquidity enhance. Experts additionally recommend that investors are cut price looking forward of the earnings season which can kick off in early April.
Siddhartha Khemka, Head – Research, Wealth Management, Motilal Oswal Financial Services says that the optimistic momentum is largely attributed to FPIs returning as patrons, coupled with opportunistic cut price looking.
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“Further, positive data on cooling inflation (CPI inflation eased to seven-month low of 3.61% in February, down from 4.31% in January) and improved growth in GDP (6.2% in Q3FY25, up from 5.4% in the previous quarter) have bolstered market sentiment,” Khemka tells TOI.
Khemka cautions that the continuation of this rally will depend on a number of international and home components together with readability on the US reciprocal tariffs slated to be imposed on India from 2nd April, the upcoming company earnings and foreign investor flows.
FPIs purchased Indian equities in three out of 5 buying and selling classes final week (web: + Rs 6,000 crore for the week), nevertheless they’ve offered shares price over Rs 3 lakh crore since the indices peaked in September. “Therefore, it is too early to comment on the sustainability of FII buying but the same will largely depend on stable economic conditions, healthy earnings growth and improved valuations,” he provides.
Satish Chandra Aluri, Analyst, Lemonn Markets Desk believes that the Indian stock markets have had a ‘remarkable rebound’ in March until now. “Bargain hunting at lower levels and better valuation, return of foreign investors amid softer dollar and lower US yields and domestic macro-outlook getting better, are the reasons that may have factored in the rebound,” Aluri was quoted as saying by PTI.
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He is of the view that after promoting a report $29 billion in the final 5 months, foreign investors are actually displaying a renewed curiosity in Indian equities. “Foreign outflows have been a major factor in recent corrections. Softer US dollar, after the Trump trade war sparked concerns over US growth, also helped as capital moved from the US to Europe and EMs like India etc,” he provides.
According to Mehul Kothari, DVP – Technical Research, Anand Rathi Shares and Stock Broker, the present stock market rally has sturdy momentum pushed by FII inflows, home financial enhancements, and sector-particular features.
However, he notes that its sustainability stays unsure due to international uncertainties and the want for earnings progress to justify valuations.
“FIIs are back on Dalal Street for now, but their return is not yet conclusive, as their behavior could shift with changing global dynamics. Investors should remain cautious, focusing on quality large-cap stocks and monitoring global cues, rather than assuming this rally marks a definitive end to 2025’s volatility,” Kothari tells TOI.