FPJ News Service mumbai

Indian stock markets on Monday rediscovered fundamentally strong sectors and favourable domestic macros as investors are learning to live with Trump’s trade policies. Reflecting the optimistic undercurrent, the 30-share BSE Sensex climbed 319.07 points to close at 83,535.35. The NSE Nifty gained 82.05 points to settle at 25,574.35.

Market gurus advise investors to rediscover fundamentally strong banking and finance, telecom, capital goods, defence and automobiles shares. “The potential resolution of the US government shutdown, coupled with renewed FIIs buying driven by a favourable Q2 earnings season, supported a positive sentiment in the market. The rise in the US 10-year Treasury yield reflects improving risk sentiment toward equities with the reopening of the federal government.

“Domestically, strengthening macroeconomic indicators are expected to underpin upward revisions in earnings estimates for H2FY26. This reinforces the current valuations and is likely to attract incremental liquidity. Sectorally, the IT index outperformed, buoyed by expectations of demand stabilization,” said Vinod Nair, head of research, Geojit Investments.

“The trend in global trade this year has been the AI trade, which has pushed up AI stock valuations to elevated valuations, though not yet in bubble territory. The strong earnings growth in the US has been a fundamental support to this AI trade. Countries regarded as AI winners have benefited from AI rally. There are signs of this AI trade losing steam as evidenced by the 3% decline in Nasdaq last week.

“This is a healthy trend. If this trend persists without high volatility, that would make the US market healthy, preempting a bubble formation and its eventual burst. Investors have to watch how this trend plays out. This emerging trend, if continues, will be particularly favourable for the Indian market which didn’t participate in the AI trade. 

“FIIs, mainly hedge funds, who have been consistently selling in India and taking money out for playing the AI trade, are now likely to pause and slowly reverse the AI trade in favour of non-AI trade in India,” said Dr VK Vijayakumar, chief investment strategist, Geojit Investments.