Indian Markets Close Week on a Mixed Note; PL Capital Sees Structural Rotation Behind Friday’s Sharp Rebound

Mumbai, May 23 – After a volatile week marked by global uncertainties, Indian equity markets staged a sharp recovery on Friday, driven by strong gains in technology and FMCG sectors. The Sensex ended 769 points higher at 81,721 while the Nifty 50 added 243 points to close at 24,853, reclaiming key levels ahead of the weekend.

Commenting on the market dynamics, Vikram Kasat, Head of Advisory at PL Capital, said

“The recent market correction was broad-based and valuation-led, but the current rebound is earnings-supported and selectively anchored in lower-multiple, value-oriented sectors. This rotation signals a structurally healthier market, less vulnerable to speculative excess.”

Key Highlights: Indian Markets Close the Week

• Sensex & Nifty Performance: Sensex rose 0.95% (+769 points) to 81,721; Nifty 50 gained 1% (+243 points) to 24,853. Despite Friday’s gains, weekly losses persisted, with both indices down over 0.65%.
• Sectoral Leadership:
  • FMCG and Private Banks led gains with +1.63% and +1.08% respectively.
  • IT, Financial Services, Metals, PSU Banks, Oil & Gas, and Realty also contributed positively.
  • Pharma and Healthcare were the only sectoral laggards, slipping marginally.
• Top Gainers: Eternal (+3.6%), HDFC Life (+3.28%), Jio Financial (+2.5%), PowerGrid (+2.46%), ITC (+2.32%).
• Most Active Stocks: Reliance Power (42.9 crore shares), Tata Teleservices (11.9 crore shares), Eternal (4.2 crore shares).
• Circuit Hits: 93 stocks hit upper circuits including Honasa Consumer and Apollo Pipes; 48 hit lower circuits including Orient Tech and Raymond.
• Market Breadth: 1,731 stocks advanced against 1,132 declines on NSE.
• Valuation and Rotation Insight from PL Capital:
  • Market correction from Sep 2024 to Mar 2025 saw broad valuation-led declines (-16% Nifty, -21% Midcap).
  • Recovery since March has been selective, earnings-backed, led by BFSI and diversified sectors (notably Reliance).
  • Valuations have partially normalized: Nifty 50 P/E at ~23x versus 25x peak in Sep 2024; Midcap P/E improved but still below highs.
  • Reduced concentration risk with a rotation away from frothy segments like autos and FMCG toward value-oriented names.
  • Rally is fundamentally supported, with price gains outpacing P/E expansion — indicating earnings growth as a key driver.

PL Capital’s Take: Structural Rotation Supports Durable Recovery

PL Capital highlights that the current market rebound reflects a healthier and more balanced phase compared to previous cycles. The market is undergoing a clear shift away from high-premium, speculative stocks toward companies with stronger earnings visibility and more reasonable valuations. This transition has reduced systemic risk and established a more sustainable foundation for growth.

“Investors are rotating into quality, value-aligned sectors, which sets the stage for a low-volatility melt-up, driven by earnings momentum and macro stability, until fresh valuation froth emerges,” PL Capital noted.

Outlook for the Coming Week

Looking ahead, Indian markets are expected to maintain cautious optimism amid ongoing global uncertainties. While domestic fundamentals such as stable corporate earnings growth and expectations of a normal monsoon support investor confidence, external factors—including US fiscal developments, geopolitical tensions, and currency fluctuations—may continue to contribute to near-term volatility.

Selective buying interest is likely to persist in quality stocks, especially in sectors like BFSI, FMCG, and technology, as the earnings season unfolds. However, broader market direction will largely depend on global cues and key macroeconomic data releases, including signals from central banks on interest rate policies.

Overall, the market appears positioned for a steady, low-volatility advance driven by earnings momentum and macroeconomic stability, provided no major shocks disrupt the environment.