Market Sense for the week ending April 27, 2025

Positive Momentum, Cautious Eye on India-Pak Tensions

Our thoughts are with the victims of the recent Pahalgam terrorist attack. We hope that this time, the government’s actions will address the root causes of such incidents.

Nifty500 closed 0.77% positive for the week. The price action was largely positive in the first half, though some profit booking was seen on Thursday and Friday. It’s natural for markets to pause after a strong run. Our markets have rebounded impressively in last three weeks, suggesting a likely bottom has been established.

On the results front, while a Moneycontrol article highlighted sluggish Q4 earnings growth in its April 25th article, according to us the market reactions to reported results have been broadly positive. In fact, more companies have seen positive or blockbuster reaction post-results than those facing negative or dismal impacts. This indicates the market may have already priced in the muted earnings expectations, leading to a more optimistic response. The data sample is still small as we have just started with the earnings season, but the initial trend is encouraging.

In the near-term, developments in India-Pakistan tensions could result in some market volatility.

Market breadth cooled down from overbought levels this week, signaling profit booking that followed the robust rally. The % of stocks above 10EMA and 30EMA had reached the overbought zone during the week and fell sharply from there. We had crossover of Nifty500's 10EMA over its 20EMA last week, a positive sign for staying long, which stays in place. It needs to be seen whether the current pullback to 50EMA will be bought into or not.