Indian equity markets show signs of recovery in Q4

As the fourth quarter of 2025 begins, Indian equity markets are showing signs of recovery after a tough period. Historical trends suggest that there is often a rally before earnings are announced, a slight decline during the results, and then a potential rebound afterward. Experts are optimistic that the market's recovery will depend heavily on corporate earnings and other external factors. The Nifty index has typically seen an increase in the weeks leading up to Q4 earnings announcements about 70% of the time. Some instances show gains of over 3%. However, the first month of the results season usually sees flat returns with a slight negative trend. Over the last ten years, the Nifty has generated an average return of about 5.7% in the three months following the Q4 results. Recent market performance has been mixed. Since October 2024, the Nifty faced challenges due to weak earnings and rising crude oil prices. Political uncertainty, especially related to the U.S. elections, has added to this volatility. Nonetheless, a 2% recovery in March 2025 indicates that some concerns may be priced into the market. Analysts point out that more than 60% of the Nifty 500 companies have surpassed a key technical level, suggesting the market may push higher. Earnings are vital, and expectations for 2025 earnings growth are cautious but optimistic. Analysts believe that if the forecasts for the next earnings season meet expectations, a more meaningful recovery could occur. In terms of economic outlook, a stable rural demand and increased government spending could drive revenue growth for Indian companies. However, global trade risks and uncertainties continue to pose challenges. Positive indicators, such as potential urban demand growth from tax relief and monetary easing, could further support market recovery. Overall, the upcoming earnings season looks to mirror previous years. There is cautious optimism about a rally, a slight dip during the results, and a rebound afterward. However, unexpected events could disrupt plans, making adaptability essential for investors as they navigate this uncertain landscape.