The Indian stock market is poised for a rebound today, influenced by several key factors...

The Sensex is now at 72,931.69 down 165.49 points (-0.21%), while the NSE is trading at 22,064.05 down 58.80 points( -0.25%).

However I am expecting the markets to recover as it seems that the issue of reciprocal Tariff is a sort of posturing by the Donald Trump's administration before the actual talks begins.

Global Sentiment:

The US Trade Negotiations: There's optimism on Wall Street that President Trump's tariff threats are strategic negotiation tools, potentially leading to outcomes less detrimental to the global economy and trade.

European Defense Stocks Surge: European markets reached record highs on Monday, driven by defense stocks amid expectations of increased military spending and potential progress in Ukraine peace talks.

Structural Reforms & Policy Momentum: 

a) Production-Linked Incentive (PLI) Scheme Expansion. 

By 2025, PLI schemes are projected to boost India’s manufacturing GDP share to 22%(from 17% in 2023),n incremental output across electronics, semiconductors, and renewables.  

Impact: Companies like Tata Electronics (semiconductors) and Reliance New Energy (solar modules) will drive earnings growth, lifting Nifty EPS by 12–15% CAGR (2023–2025).

b) Infrastructure Investment Surge:  

🌡️National Infrastructure Pipeline (NIP): ₹111 lakh crore ($1.5T) allocation (2020–2025) for roads, ports, and green energy.  

🌡️2025 Play: Larsen & Toubro (L&T), IRB Infra, and Adani Ports will benefit from execution ramp-up, with order books expanding by 20% YoY.

Global Tailwinds: 

a) U.S. Rate Cuts & FDI Inflows:  

🌡️The Fed is expected to cut rates to 3.75–4.0% by 2025, easing global capital costs. India’s FDI inflows could rebound to $75–80B annually (vs. $65B in 2023) as supply chains diversify from China.  

🌡️Sectors to Watch: Automotive (EVs), pharmaceuticals, and data centers (e.g., M&M, Sun Pharma, AdaniConnex).

b) Defense & Renewable Energy Exports:  

🌡️Defense: India aims for $5B in defense exports by 2025 (vs. $1.9B in 2023), benefiting HAL and Bharat Dynamics.  

🌡️Renewables: $50B+ investments in solar/wind by 2025 (MNRE targets) will position Adani Green and Tata Power as global leaders. 

Corporate Earnings Revival

 🌡️Nifty 50 Earnings: Consensus forecasts 18% EPS growth in FY26** (2025–26), driven by:  

🌡️Banks: Credit growth at 14–15% (urban demand + SME lending).  

🌡️Consumer Discretionary: Rural recovery (normal monsoons in 2024–25) to boost FMCG/auto sales (HUL, Maruti).  

🌡️Valuations: Nifty trading at 18x FY26E P/E, below 5-year average (20x), signaling upside potential. 

Liquidity Infusion:

Reserve Bank of India (RBI) Initiatives: The RBI has announced measures to inject substantial liquidity into the banking system, including Open Market Operations (OMOs) totaling ₹60,000 crore and a 56-day Variable Rate Repo auction of ₹50,000 crore. 

Repo Rate Cut: The RBI recently reduced the repo rate by 25 basis points to 6.25%, aiming to stimulate economic growth.

Domestic Investor Boom:

SIP Inflows: Projected to hit ₹25,000 crore/month by 2025 (Vs ₹16,000 crore in 2023), creating a structural liquidity floor.  

Pension & Insurance Reforms: NPS/EPFO allocations to equities could inject $30B/year into markets.

Liquidity & Macro Stability:

RBI’s Pro-Growth Stance:  

Rate Cuts: 75–100 bps cuts likely by 2025 (repo rate to 5.5–5.75%) as inflation stabilizes near 4.5%.  

Liquidity Support: RBI’s OMO purchases (₹8–10 lakh crore/year) to keep 10Y bond yields below 7.0%, reducing corporate borrowing costs.  

Risks to Monitor:

Geopolitical Shocks: Middle East tensions or China-Taiwan conflicts disrupting trade.  

Climate Pressures: Poor monsoon in 2025 impacting rural demand.  

Global Recession: Prolonged EU/U.S. slowdown hitting IT/export sectors.  

These combined factors—positive global cues, technical indicators signaling oversold conditions, and significant liquidity measures by the RBI—suggest that the Nifty 50 is well-positioned for a rebound after its recent decline.

Technical Indicators:

Relative Strength Index (RSI): The Nifty 50's RSI has fallen below 30, indicating oversold conditions and a potential buying opportunity. 

Average Directional Index (ADX): An ADX value above 25 suggests a strong trend; current readings indicate a robust market movement. 

Williams %R: This oscillator is in oversold territory, reinforcing the potential for a market rebound.

Conclusion: 2025 as an Inflection Point: 

The confluence of policy continuity (post-2024 elections), global capital rotation into India, and earnings acceleration positions Nifty 50 for a sustained rebound toward 26,000–28,000 by 2025 (20–22x FY26E P/E). Key entry sectors:  

1. Manufacturing (PLI beneficiaries),  

2. Renewables (energy transition play),  

3.  Financials (rate-sensitive growth).  

Current developments (PLI progress, RBI liquidity, SIP inflows) are laying the groundwork for 2025’s rebound – investors should build exposure during corrections.