Though Indian markets posted only modest gains in September, the markets may be entering an early recovery phase, with improving breadth, sectoral rotation and stable macros, a report said on Thursday.
PL Asset Management said in a report said that strengthening breadth — the share of stocks hitting new 12‑month highs has doubled from recent lows, and six‑month breadth readings exceed 55 per cent — signalling growing investor conviction and improving risk appetite.
During September, global equity markets rallied, with the S&P 500 up 3.1 per cent, the Nasdaq surging 5.1 per cent and Hong Kong’s Hang Seng jumping 7.1 per cent.
Meanwhile, Nifty 50 rose 0.75 per cent, while the Nifty Midcap 150 and Smallcap 250 gained 1.39 per cent and 1.13 per cent, respectively.
In Indian markets, value and high-beta stocks have outperformed, reflecting the market’s shift toward cyclicality and growth-oriented sectors, the report said.
“Conversely, quality and low-volatility factors, which dominated during the earlier risk-averse phase, are now mean-reverting. This transition underscores a renewed willingness among investors to embrace risk, positioning the market for potential upside as sentiment normalises,” the asset management firm said.
“Indian markets are entering a healthy normalisation phase. Our indicators suggest that the risk appetite cycle is turning, supported by resilient domestic liquidity, stable macros, and early signs of earnings revival,” said Siddharth Vora, Head- Quant Investment Strategies and fund manager, PL Asset Management.
While short-term volatility may persist due to global factors, the medium-term setup looks increasingly constructive, he added.
PL Asset Management expects markets to remain range‑bound but resilient, with a positive bias driven by the upcoming Q2 FY26 earnings season and festive consumption tailwinds.
Over the medium term, the asset management forecasted a stronger growth cycle supported by GST-led consumption revival, potential rate and tax adjustments, and a turnaround in corporate earnings.
