When asked about the top five critical reasons driving the Indian stock market today, stock market analysts cited the following five reasons: Buzz about the RBI rate drop, stronger Q4 performance in 2025, a stable Indian currency, DIIs and FIIs in stock-buying mode, and a steady Indian inflation forecast. They predicted that the Dalal Street rise will continue this week, with some profit-booking triggers as most Indian companies are trading at good prices.

Improved Q4 Performance 2025

Avinash Gorakhkar, Head of Research at Profitmart Securities, highlighted the stronger Q4 results 2025 trigger, saying, "Signs of economic recovery are now visible as Fitch Ratings expects a pickup in capital spending over the next two financial years — FY26 and FY27." He stated that India's real Gross Domestic Product (GDP) growth fell to 5.4% in the July-September 2024 quarter before rising to 6.2% between October and December 2024. As a result, the industry expects improved consecutive Q4 performance in 2025.

Buzz on RBI Rate Cuts

Avinash Gorakshkar of Profitmart Securities pointed to the buzz about the RBI rate drop following the US Fed meeting last week, saying, "In the guidance after last week's US Fed meeting, the market is expecting a rate cut in the upcoming RBI policy meeting in April 2025." As a possible RBI rate decrease will increase market liquidity, Dalal Street investors are discounting this through robust purchasing. Gorakshkar highlighted the findings of Morgan Stanley's report published last week, stating that India's consumer price index (CPI) inflation is expected to average 4% in FY26, paving the way for a cumulative 75 basis points (bps) rate cut by the RBI—an increase from the previously estimated 50 bps easing cycle.

An abundance of stocks at attractive valuations: Because of the abundance of excellent fishes, both DIIs and FIIs have begun bottom fishing. Except for a few sessions in March 2025, DIIs have consistently bought in the cash section. Last Friday, DIIs purchased shares worth ₹30,788.19 crore in cash, while FIIs sold Indian shares worth ₹15,412.13 crore. Last week, FIIs bought Dalal Street-listed shares worth ₹5,819.12 crore in the cash market."We expect this upward momentum to continue on the back of foreign institutional investors' return to the Indian market amid attractive valuations and signs of economic recovery," said Siddhartha Khemka, Motilal Oswal's Head of Research - Wealth Management

A Positive Prognosis for the Indian Economy

According to a Morgan Stanley estimate issued last Thursday, India's economy will be the world's third largest by 2028. The global brokerage expects the Indian GDP to rise from $3.5 trillion to $4.7 trillion by 2026, ranking fourth behind the United States, China, and Germany. Morgan Stanley predicts that the Indian economy would overtake the German economy by 2028, becoming the world's third-largest economy.According to Morgan Stanley, decreased trailing inflation, particularly due to lower food costs, has created room for further rate decreases. The global brokerage business forecasts India's CPI inflation to average 4% in FY26, up from its previous projection of 4.3%. The Morgan Stanley research now expects CPI inflation to average 4% in the January-March 2025 quarter, down from 4.5% previously. The firm stated that because the RBI targets headline CPI in the 2-6% range, the current trend leaves plenty of leeway for additional lowering.

Stable Indian National Rupee (INR) Boosts FII Buying

"Due to the stable Indian rupee, foreign investment, both porfolio and institutional, is likely to increase. The recent trend reversal in FIIs can be linked to the Indian rupee's strengthening. So, the recent bounce in the Indian stock market following a number of RBI initiatives, including a 25 basis point rate drop, is why foreign institutional investors are turning to Indian stocks," said Anshul Jain, Head of Research at Lakshmishree Investment & Securities.According to Anshul Jain of Lakshmishree Investment and Securities, the addition of over six lakh new retail investors to the Indian stock market last week is also a crucial component in the 'Marvelous Monday' on Dalal Street.

Arun Kejriwal, Founder of Kejriwal Research and Investment Services, spoke on the prospects for the Indian stock market following this rise, saying, "Not much has changed except the technical elements of the markets. On April 2nd, Donald Trump will make tariff pronouncements. We shall feel the impact of these announcements when trading resumes in Indian markets on April 3rd.