New Delhi, March 13: Indian equity markets continue to trade within a narrow range despite strong corporate earnings growth, as global uncertainties and geopolitical tensions keep investor sentiment cautious, according to a recent report by Bajaj Finserv Asset Management.
The report highlighted that companies in the Nifty 500 index posted a 16 per cent year-on-year increase in profits in the third quarter of FY26, marking the strongest earnings growth seen in nearly two years. The performance reflects improving profitability across sectors and indicates a gradual strengthening of corporate balance sheets.
Despite this positive earnings momentum, domestic stock markets have not witnessed a major rally and have remained largely range-bound for more than a year. Analysts attribute this trend to external factors, including global economic uncertainties and geopolitical risks, which continue to influence market movements.
According to market experts, strengthening corporate earnings provide a solid base for the long-term growth of Indian equities. However, global developments have created volatility and limited the immediate upside in the markets.
The report also pointed to improving domestic economic indicators. Credit growth in the banking sector has returned to double-digit levels, signalling a rise in economic activity and demand for loans. Meanwhile, consumption trends have shown signs of recovery following recent policy measures, including tax relief through GST adjustments.
Monetary policy easing has also supported the economy. The Reserve Bank of India’s cumulative rate cuts and liquidity measures have helped reduce borrowing costs for businesses and households, which could support investment and consumption in the coming quarters.
However, emerging global trends are creating new challenges. The rapid expansion of artificial intelligence technologies has raised concerns about potential short-term disruptions in India’s IT services sector, particularly regarding demand patterns and employment dynamics.
Geopolitical tensions in the Middle East are another key risk factor. As India imports the majority of its crude oil, any disruption in global supply routes could lead to higher oil prices, putting pressure on inflation and the rupee.
The report warned that prolonged geopolitical instability may also affect sectors such as aviation, chemicals, paints and oil marketing companies, while increasing the risk of foreign investor outflows.
Meanwhile, the bond market has also witnessed fluctuations due to foreign capital movements and global developments, which have influenced currency movements and government bond yields.
Despite near-term challenges, analysts believe that improving domestic fundamentals and stable inflation could help support market stability in the medium term, although global developments will continue to shape investor sentiment.
