Indian stock market posts best monthly gains in 4 years
What's the story
India's stock market has beaten all other major global markets in March, posting its best monthly gain in four years.
The combined market capitalization of all listed companies on the Bombay Stock Exchange (BSE) increased by 9.4% in dollar terms, amounting to about $4.8 trillion from $4.39 trillion at February's close.
The uptick is the biggest since May 2021 and puts India on top among the world's 10 largest equity markets this month.
Market performance
Broader indices outperform benchmark indices
The BSE MidCap and SmallCap indices outperformed the benchmark indices, Sensex and Nifty, in March.
The MidCap index climbed by 8.4%, while the SmallCap index saw an impressive rise of 9.8%.
This robust performance is attributed to value buying and expectations of a rate cut by the Reserve Bank of India (RBI).
Investor sentiment was further boosted by signals from the US Federal Reserve indicating potential interest rate cuts in 2025.
Economic indicators
Lower inflation fuels rate cut expectations
The latest consumer price index inflation data, which stayed below the RBI's medium-term target of 4%, has intensified market hopes for a possible rate cut in the central bank's next monetary policy review.
This comes as analysts expect new liquidity measures from the RBI.
Since late 2024, the RBI has pumped in around ₹3 lakh crore into durable liquidity via variable rate repo (VRR) auctions, swaps, and open market operations (OMOs).
Investment strategies
Market rally prompts mixed strategies for investors
Gaurang Shah, Senior Vice President at Geojit Financial Services, noted that markets have bounced back by over 1,100 points on Nifty and 3,500 points on Sensex since the beginning of March.
He advised short-term traders to book profits while long-term investors should stay invested as more gains are likely if fourth-quarter earnings continue to support it.