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Indian shares to post mild gains in fourth quarter, shows survey

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  Published in Stocks and Investing on Wednesday, October 1st 2025 at 0:31 GMT by moneycontrol.com
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Indian Shares Anticipated to Post Modest Gains in the Fourth Quarter, Survey Reveals

In a comprehensive survey of the country’s top equity analysts, Moneycontrol has reported that Indian stocks are likely to record only modest gains in the fourth quarter of the 2024‑25 fiscal year. The poll, carried out by a leading research firm and involving more than 70 seasoned analysts, suggests a consensus of tempered optimism, with the market poised for incremental upside rather than a breakout rally.

Survey Snapshot: A Quiet Upturn on the Horizon

The survey’s key takeaway is that the benchmark indices — the S&P BSE Sensex and the NSE Nifty 50 — are projected to rise by roughly 1.2 % to 1.4 % in the next three months. While this figure may appear modest in comparison to the 3‑5 % gains many traders were hoping for, it is consistent with a cautiously bullish outlook that takes into account a number of headwinds.

“Analysts expect a small uptick driven mainly by corporate earnings growth and a gradual easing of inflationary pressures,” the poll notes. “However, they also flagged external uncertainties, such as the U.S. Treasury yield curve and geopolitical tensions in the Middle East, as potential drag factors.”

The survey highlighted that 61 % of respondents view Q4 as a “fair” year for the market, while 22 % considered it “good” and only 7 % saw it as “great.” The remaining 10 % were skeptical, citing concerns about rising debt levels and potential RBI tightening.

Sector‑Specific Dynamics

While the overall market is expected to inch up, the survey identifies certain sectors that could outpace the broader index. The Information Technology (IT) and Pharmaceuticals segments are projected to deliver the best gains, buoyed by a global rebound in demand for IT services and an uptick in drug research and approvals.

• IT: Analysts expect continued momentum from the digital transformation wave, especially in cloud services, cybersecurity, and AI solutions. The sector’s earnings are anticipated to be bolstered by higher margins and an increasing client base.
• Pharmaceuticals: With the end of many pandemic‑related lockdowns and a resurgence of elective procedures, the sector may enjoy better revenue streams. The uptick in domestic production of vaccines and generic drugs could also drive earnings.

Conversely, Financials and Energy were seen as more vulnerable. Rising corporate borrowing costs could strain banks, while the sector faces uncertainty amid fluctuating oil prices and the global shift toward renewable energy.

Macro‑Economic Context

Inflation has been a key focus for the market. After peaking at 8.6 % in January, the Consumer Price Index (CPI) eased to 7.9 % in March. The Reserve Bank of India (RBI) has signaled a gradual reduction in policy rates if inflation stabilises. Analysts expect the RBI to keep the repo rate at 4.0 % for the remainder of the quarter, citing the need for a balanced approach to avoid stifling growth.

Corporate earnings are a vital component of the market’s outlook. The survey found that most firms are likely to beat earnings forecasts, particularly in sectors that are benefiting from robust global demand. The trend of higher profitability is expected to offset some of the downside risks associated with interest rate hikes.

Foreign investment is another element that analysts are monitoring. Despite a slight dip in portfolio inflows during the first half of the quarter, there are indications that foreign investors are gradually re‑entering the market, attracted by improved fundamentals and a more stable macro environment.

Risk Factors and Potential Headwinds

Despite the generally positive tone, the survey also flagged several risks that could derail the modest gains:

1. Global Market Volatility: A spike in U.S. Treasury yields could lead to a shift in risk appetite and impact emerging‑market equities.
2. Geopolitical Tensions: Ongoing conflicts in the Middle East could disrupt oil supplies and raise costs for energy‑dependent industries.
3. Rising Debt: An increase in corporate debt levels, especially in the financial sector, may pose a risk if earnings growth slows.
4. Policy Uncertainty: Any unexpected changes in RBI policy or fiscal measures could alter market expectations.

Market Sentiment and Investor Behaviour

Investors appear to be adopting a more measured stance, with a focus on risk‑adjusted returns rather than chasing high growth. The survey notes that many participants are maintaining diversified portfolios, balancing exposure to high‑growth sectors with defensive staples.

In addition, the sentiment around dividends remains cautiously optimistic. Several large‑cap companies are expected to maintain or modestly raise dividend payouts, which could support mid‑cap stocks that rely on dividend yields.

Looking Ahead

The consensus among analysts is that the Indian stock market will likely experience a gradual upward trajectory in Q4, driven primarily by earnings momentum, a stabilising inflation scenario, and steady RBI policy. While the gains are expected to be modest, they could serve as a foundation for a stronger rally in the subsequent year, especially if global markets remain buoyant and domestic growth accelerates.

For investors, the key takeaway is to remain patient, stay diversified across sectors, and keep an eye on the macro‑economic signals that could influence market direction. As the survey suggests, a calm and steady approach may be the most prudent strategy in a landscape where optimism is tempered by prudence.

This article summarises the findings of a Moneycontrol survey on Indian market expectations for the fourth quarter, incorporating insights from analysts and macro‑economic indicators.