The Indian stock market rebounded strongly in the first half of 2025, overcoming significant geopolitical challenges. Analysts are optimistic about the Nifty 50’s outlook for the second half of the year, expecting the index to reach new highs. This is supported by strong earnings, continued policy support, and positive macroeconomic indicators.
“On the fundamental front, the market is buoyed by expectations of strong Q1 FY26 earnings, sustained policy support from the RBI, and pro-growth initiatives by the government,” said Vishnu Kant Upadhyay, AVP – Research & Advisory, Master Capital Services. Positive international developments, a normal monsoon forecast, easing geopolitical tensions, stable crude oil prices, and resilient domestic macroeconomic indicators are likely to bolster investor sentiment. Technically, the market is on firmer ground, with key global macro indicators slowly falling into place.
“If current macro tailwinds hold steady, Nifty could comfortably scale 27,500 by the end of the year—even on a conservative basis. Unlike previous cycles, this rally is being built on improving internals, not just hope,” added Harshal Dasani, Research Analyst, INVasset PMS. Against this backdrop, analysts have shared several fundamental and technical stocks poised for solid returns in the second half of 2025.
These include Adani Enterprises, Mahanagar Gas, Bandhan Bank, Jio Financial, Kirloskar Oil Engines, J Kumar Infraprojects, DLF, Hindustan Unilever, Varun Beverages, and Voltas. Indian equity investors have shown a clear preference for large-cap companies during the first half of 2025, driven largely by global uncertainties that have led to market volatility.
Indian markets show promising growth
Mid- and small-cap indices have notably underperformed compared to the previous year, as investors sought the stability and perceived safety of larger, more established companies. One key sector that has bucked this trend is the defense sector, with the Nifty Defence index rebounding significantly due to rising Indo-Pak tensions. Garden Reach Shipbuilders, a major defense contractor, nearly doubled its value during this six-month period, emerging as the top gainer of the Nifty 500 index.
Conversely, the Nifty IT index was the top loser, reflecting broader challenges faced by the technology sector during this timeframe. The BSE Sensex has shown a robust performance during the first half of 2025, seeing significant gains and boosting investor confidence. Analysts attribute this rally to a combination of favorable domestic and global economic conditions, improved corporate earnings, and stable government policies.
Experts maintain a cautiously optimistic outlook for the rest of the year. Shifting global economic indicators and domestic policies will play critical roles in influencing the market trajectory. Analysts suggest that while the sense of momentum is likely to continue, market participants should remain vigilant about potential volatility.
The attention is also turning towards small-cap stocks, which have the potential to yield high returns but come with inherent risks. Expert opinions diverge; some believe that the prevailing economic conditions could foster a conducive environment for small-cap growth, while others advise a more cautious approach due to volatility in this segment.