Stock Market Bull Run: Is the Market Set for Another Rally?
Are You Expecting a Stock Market Bull Run?
Over the past months, various stock markets, including India, have had their fair share of fluctuations. The primary causes were former President Trump’s trade policies and other geopolitical concerns. At the moment, things appear to be on the mend and global stock markets are exhibiting recovery prospects.
And this leads us to ponder—Are the stock market set for the next bull run? We will evaluate recent events to seek an answer.
What Factors are Driving Global Stock Price Increases?
Donald Trump has become more lenient with trade and investment deals. This has provided some relief in China–US relation tensions which has lifted the sentiments at Wall Street. The S&P 500 is currently at 5,958, which is 3% lower than its high of 6,148 in February.
In India, NSE Nifty has also recovered and is just 5% shy of its record high. In the preceding month, there has been a rise in global stock indexes which is being led by Nasdaq.
Global Index Performance Snapshot
| Index | 1-Month Return (%) | YTD Return (%) |
|---|---|---|
| Dow Jones | 8.97% | 0.26% |
| S&P 500 | 12.79% | 1.30% |
| Nasdaq | 17.96% | -0.52% |
| DAX (Germany) | 12.08% | 19.38% |
| FTSE 100 (UK) | 4.94% | 6.26% |
| CAC 40 (France) | 8.25% | 6.86% |
| Nikkei 225 (Japan) | 8.71% | -5.37% |
| Shanghai Composite | 2.77% | 0.47% |
| Hang Seng (HK) | 9.11% | 16.38% |
| Taiwan Index | 12.63% | -5.17% |
| KOSPI (South Korea) | 5.78% | 9.48% |
| NSE Nifty (India) | 4.90% | 5.82% |
| BSE Sensex (India) | 4.81% | 5.36% |
Foreign Investors Return to Indian Market
Following a significant period of selling, during which they offloaded stocks worth more than Rs. 1.16 lakh crore in the first quarter, FIIs (Foreign Institutional Investors) have undergone a paradigm shift and currently exhibit a net positive bias towards the Indian equities market, buying up to 23,000 crore in April and May.
In addition, this newfound interest propelled sizable block deals such as Bharti Airtel and JSW Infrastructure. Moreover the primary market seems to have come to life, as illustrated by the successful conclusion of Ather Energy’s IPO, the first mainboard IPO of the new financial year.
FII Net Flow in 2025 (₹ crore)
- January: -78,027
- February: -34,574
- March: -3,973
- April: +4,223
- May: +18,620
Will This Uptrend Continue?
Investors everywhere are now asking the same question: will this trend continue? To gain more information, let’s consider a few important details:
- Trump’s Softer Approach
Trump’s approach came as a shock to world stock market due to the imposing tariffs he placed. However, these does seem to have served as a precursor to recent negotiations. The recent U.K. trade deal and the cease-fire with China means world supply chains won’t be Federal Reserve stomped over for the time being. Additionally, a proposed piece of legistlation aimed at controlling the prices for drugs was also softened.
This suggests that he will not issue any drastic market hurting actions that risk the economy, which of course is good. Regardless, slight market bounces are still likely.
- U.S. Credit Rating Downgraded.
The sovereign rating of the U.S. was downgraded to Aa1 from Aaa by Moody’s with the outlook shifting from negative to stable. While this may seem like a less than ideal outlook, some analysts argue it is overdue due to the US fiscal unsustainability concerns. Investors these days tend to migrate to gold from the dollar.
This shouldn’t create a big stir in the market because the downgrade was largely anticipated.
India Is Not at Full Speed but Stable
The Reserve Bank of India (RBI) noticed global uncertainty when lowering the expected growth rate of India’s GDP for FY26 from 6.7% to 6.5%. As India may outperform expectations, the state of global trade is improving. Supply chain changes and the India-UK trade deal could increase export potential.
Shifting U.S. IT spending has a direct impact on India’s IT sector. Though uncertainty regarding past deals have stunted growth, new contracts are coming in. Growth is likely to strengthen the consumption-driven economy of India.
Raising Capital Spending and Growing Housing
Infrastructure and housing as key growth areas continue to remain strong. Following a dip in FY25, the government increased capital expenditure from ₹10.2 lakh crore to ₹11.2 lakh crore for FY26.
Despite worries, real estate developers are overly optimistic.
- Signature Global CEO Rajat Kathuria expects 20% YoY growth in NCR stating that demand will remain strong and prices will rise due to limited supply.
- Brigade Enterprises MD Pavitra Shankar anticipates 15% YoY growth in mid to luxury housing segments.
- Godrej Properties CEO Gaurav Pandey stated that as sales of ₹10,000 crore and the media portray a negative take on the project portfolio, there is still demand driven by perception.
Encouragement for the Construction and Allied Industry Sectors
The health of India’s real estate sector, especially construction, continues to be active in various metropolitan areas with particular regard to the redevelopment projects in Mumbai. This is likely to increase the requirement for building materials and home improvement items.
Job Market Weakens
Despite these benefits, there still exists the expectation of rural demand slowly recovering. Experts are advising caution when it comes to urban demand because the job market is considerably weak.
If international trade activities increase, they may provide an impetus to domestic as well as international demand.
Concerns While Yielding Valuations
Sustaining momentum in the market rally requires tangible economic growth. Current markets are experiencing a resurgence, propelling pending valuations even further.
Based on historical valuations, the Price-to-Book ratio suggests that the BSE Sensex is over 4x more expensive than baseline expectation. During the bull run of 2005–2008, these valuations also appeared, however, they are strongly considered to be inflated.
What Should An Investor Do Now?
From hereon, I expect instigation of fresh growth signals to shift market direction. While the market is currently overvalued, even the slightest negative turn may trigger a correction.
Experts suggest taking a cautious approach regarding first-time investments at this time. Regardless of this, completely exiting the market is not recommended either. Given that markets can fluctuate on both sides, it is best to wait for clearer signals before taking drastic actions.
Final Thoughts
The stock market indicates potential the economy is ready for another bull run. The encouraging signs include: global trade, foreign investment, and a robust domestic sector. Nevertheless, it is important to maintain optimism but with extra care. Investors should keep monitoring developments, be vigilant about valuation assessment, and refrain from hasty decisions.
