Amar Ambani, stock market analyst and executive director at YES Securities, on Thursday, November 27, observed that it’s time investors moderated their expectations of returns from the Indian stock market to a more reasonable yet healthy 12-14% after almost three years of 20%-plus returns.
Ambani’s comments come on a day when the Indian stock market’s benchmark indices Sensex and Nifty rose to fresh all-time highs after a gap of 14 months. Despite rallying sharply in intraday deals, the indices ended flat, signalling caution at higher levels.
Ambani said that investors should not write off India because it’s going through a difficult phase, and he believes the medium-term outlook remains healthy even though the near-term trend has been tough.
What’s weighing on Indian stock market?
So far in 2025, the Indian stock market has lagged its emerging market peers — the most in 25 years — amid crowding in AI stocks. India is being viewed as an anti-AI market that was already trading at high valuations, thus emerging as the biggest underperformer among peers.
Additionally, Ambani highlighted that India was among the worst hit by Trump tariffs and a depreciating rupee. Trump imposed a massive 50% tariff on India, which has pressurised Indian exports and pushed the rupee to an all-time low of 89.48 against the greenback.
A weak rupee and high valuations have also diminished India’s appeal for foreign portfolio investors. Though domestic money has held up index levels, as highlighted by Ambani, a big chunk has gone into primary issues rather than the secondary market.
Tide is turning…
Despite these challenges, as the Indian stock market hits a fresh high, Ambani said things are turning in India’s favour, led by earnings revival, consumption support in the form of tax cuts, GST rationalisation and better liquidity.
“Inflation is at the lowest levels in years, which should allow the RBI to cut rates (with the Fed expected to move same way). Private capex will pick up (but gradually), helped by roughly ₹1.5 lakh crore of fresh primary market proceeds over the last two years,” he added.
He believes that after a long phase of price and time correction, sentiment can turn faster than most people expect. However, he warned that investors should not expect a repeat of 20% plus annual returns and rather reset expectations to around 12-14% for the next 12 months.
Stay focused on earnings, balance sheets and asset allocation, not just headlines, he added.
Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
