The Indian stock market is enjoying a decent, fresh, bullish run, with the benchmarks—the Sensex and the Nifty 50 — up for the fourth consecutive session on Tuesday, October 7.
Both key indices have gained over 2 per cent in these four days, driven by the improved risk appetite of investors ahead of the start of the September quarter (Q2FY26) results season.
Amid India’s healthy growth-inflation dynamics, driven by a robust monsoon and policy reforms such as GST rationalisation, as well as expectations of further monetary easing, the Indian stock market is expected to continue its upward march in the short to medium term.
With macroeconomic indicators hinting at a potential market revival, investors are increasingly wondering if it’s time to start chasing momentum.
Indian stock market: Better days ahead?
According to experts, the domestic market is ripe for a bull run due to expectations of earnings revival, healthy economic growth, lower inflation, and reasonable valuation.
Devarsh Vakil, the head of Prime Research at HDFC Securities, highlighted that India’s economic resilience remains robust, supported by strong agricultural prospects from above-normal monsoons, healthy kharif sowing, and adequate reservoir levels.
These fundamentals, combined with the momentum in the services sector, stable employment, and recent GST rationalisation, are expected to boost demand and counter external headwinds, including elevated US tariffs.
The spell of weak earnings is also likely to come to an end soon. Vakil believes the July-September earnings cycle is poised for strong performance, underpinned by softer commodity prices, moderating inflation, sustained banking sector strength with healthy loan growth, and resilient demand in the auto and capital goods sectors.
Moreover, the valuations of the benchmarks have come back to reasonable levels, and experts believe this should prompt a shift in the stance of foreign investors.
“Valuations are reasonable, with Nifty trading at 20.6 times in line with long-period average, and any evidence of earnings growth pickup should help valuations expand,” said brokerage firm Motilal Oswal Financial Services.
However, the domestic market may remain volatile in the near term, influenced by Q2 corporate earnings, management guidance, and the effects of GST rationalisation.
Value or momentum?
The last one year has been challenging for momentum index funds. Data show that some momentum funds, such as Motilal Oswal Nifty 200 Momentum 30 Index Fund, UTI Nifty200 Momentum 30 Index Fund, and Edelweiss Nifty Midcap150 Momentum 50 Index Fund, have given negative returns in the range of 7-15 per cent over the last year.
On the other hand, some value funds, such as ICICI Prudential Value Fund (erstwhile Value Discovery), DSP Value Fund, and Groww Value Fund, have returned 3-5 per cent over the last year. The Nifty 50 has gained about 1.5 per cent over the last year.
“2025 was a tough year for momentum strategies. With many geopolitical issues and tariffs in the picture, markets have been choppy, with quick reversals and high volatility, conditions where momentum often struggles,” Trivesh D., COO, Tradejini, observed.
“Value strategies have quietly outperformed. After an exceptional 2024, when high-momentum stocks outpaced low-momentum ones by nearly 28 per cent, such reversals were not unexpected,” Trivesh said.
For short-term traders, the market appears to have ample opportunities.
“For short-term traders and momentum chasers, the market trajectory is expected to be positive, with a focus on corporate earnings and management’s commentary about the second half of FY26, IPO market buzz, FOMC minutes, Powell’s speech, and hopes for positive developments on the India-US trade deal,” said Vakil.
Experts believe it is time investors start looking at momentum. However, an aggressive chase should be avoided, and long-term investors should maintain a balanced mix of both in their portfolio.
Shruti Jain, Chief Strategy Officer at Arihant Capital Markets, pointed out that at this juncture, it isn’t about chasing only value or shunning momentum — both can play out in a rangebound market.
“We have seen this before: sectors rotate, participants churn, and select value names rally before correcting. FMCG, for instance, saw strong gains in HUL before a pullback. Even today, there are attractive opportunities in consumer names like Raymond Lifestyle and certain infra stocks post-correction,” said Jain.
“Some IT counters are also entering the value zone when seen against their 5–7 year valuations. The key is to stay stock-specific, not theme-specific,” Jain added.
However, some experts believe that value is still more attractive than momentum due to valuation comfort.
“Right now, value stocks look genuinely attractive. Growth stocks are trading at double their usual premium versus value, making value the most compelling it has been since the 1990s,” said Trivesh.
He added that sectors such as defence and shipping are seeing traction due to government capital investment allocations.
“These segments provide good upside with decent dividend yields, while for many AI and high-growth names it seems to appear stretched,” said Trivesh.
While experts believe that current market weakness, driven primarily by global factors rather than domestic structural concerns, presents opportunities for long-term investors to accumulate quality stocks at attractive valuations, long-term investors must keep in mind the earnings growth and valuations of the stocks they are eyeing to invest in.
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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.
