Midcaps Regain Momentum in 2025: What's Fueling the Upswing?

Stock market news: The midcap market has regained popularity after a turbulent beginning to 2025 because analysts forecast the current rally to endure if domestic earnings remain solid and liquidity conditions and global market signals stay supportive. The midcap sector looks primed for further gains as inflation declines and foreign investment returns while valuation trends improve following a major correction.

Rajesh Palviya from Axis Securities asserts that midcaps show strong potential for growth due to positive economic indicators and recent price corrections unless new adverse factors appear.

After falling nearly 16 percent between January and April 9 due to President Trump's 90-day tariff pause announcement the Nifty Midcap 100 index regained most of its losses and now trades 0.3 percent lower compared to the year-to-date.

According to Ruchit Jain who serves as Vice President of Technical Research at Motilal Oswal the momentum in the markets should continue because geopolitical tensions have eased alongside a weaker dollar index and renewed foreign inflows. Experts state that Thursday’s significant Rs 5,393 crore investment from foreign investors confirms their ongoing commitment to Indian equities despite concerns about shifting to more affordable Chinese stocks.

This recovery has been broad-based. The initial narrow recovery driven by NBFCs and defence stocks has grown to encompass metals, real estate, automobiles and other rate-sensitive sectors which have gained from reduced inflation and continuing policy support expectations.

Market analysts credit the significant recovery to better sentiment levels alongside earnings that exceeded expectations and new investments from both local and international investors. The recovery started with domestic institutional investors (DIIs) and retail participants before foreign portfolio investors returned which strengthened market confidence.