Bulls out of hiding, run amok
On Monday morning (10.30 am; March 16, 2026), the Sensex was just over 74,000 points, or down almost 14 per cent from its high of nearly 86,000 in December 2025. Now, it is up more than 2,500 points within three trading days. The almost-unstoppable, ever-rising index, with minor, almost irrelevant, intra-day dips, has surprised, even shocked even the most optimistic investors. Even the Nifty Small-Cap 100 index gained almost four per cent from its Monday’s lows. Yesterday, the gains were bolstered by one of the most battered sectors over the past several months, IT and software. Somehow, excitement and enthusiasm seem to have returned on Dalal Street.
Most people cannot fathom this change, from a feeling of doom last week to one of boom this one. The change in sentiments comes due to no rhyme or reason, as the war-related tensions in the Middle East continue, global crude oil prices remain over $100 a barrel, supply constraints tighten, currencies dip, and GDP growths falter. Although the US claims that the war is at an end, it adds that it is likely to continue the bombings and missile attacks. Although nations may release emergency oil reserves, the shortfalls will not vanish. So, what explains the turnaround in the Indian stock indices?
It is not what is happening that has become important but events that were anticipated, even predicted, and did not happen that are crucial. In some ways, it is reverse psychology at work. One expected the worst. Since it did not materialise, it was taken as a huge positive. The lack of bad is good. The lack of good does not matter. A positive-negative is a positive. A negative-positive is not relevant. It is like when you expect to die, and escape with serious injuries, it is something to celebrate. The lack of death, even if it is a near-death experience, is life.
Consider the crude prices, for instance. Once the global prices reached $120 within no time, and Iran selectively, but effectively, closed the Strait of Hormuz, which earlier handled a fifth to a third of global supplies, the expectations were that the prices will continue the upward climb. Iran claimed that $200 was a distinct possibility, and might happen sooner than later. Then, prices dipped to $80-90, and went up to over $100, and stabilised around those levels. Since the prices did not climb back to $120, or go up to $150, but remained at $100 was seen as extremely good news, and positive one, by the investors.
According to an analyst quoted in media reports, “Despite the uncertainty regarding the war, markets have staged a bounce-back. One factor that enabled this… is crude remaining around the $102 level, and fears spiking above $120 not materialising. The near-term scenario will be one of the markets responding mildly positively to some good news, and negatively to bad news.” In effect, crude is the new reverse benchmark for the stocks. If it is stable, equities zoom. If it is down, stocks boom. If it is up, stocks will not know what to do.
As usual, despite the tensions, war bugles, and crude screams, there are other ongoing battles between foreign and domestic investors in the Indian stock markets. For almost two years, these tussles were on, and they seem to go on without respite. In March 2026 so far, the foreigners have sold shares worth more than INR 70,000 crore. But the domestic ones purchased stocks worth more than INR 88,000 crore. It does not make sense why the latter bought shares in a flailing and sensitive situation, when indices across the globe were on the way down.
For some experts, the trend indicates that the Indian investors have more faith in the Indian equities, and nation’s growth story. The high GDP growths in the past few quarters, low inflation for a year or so, and exports resilience despite the trade-tariff tensions show that the economy is on track despite the falling rupee, and restrained corporate earnings. The GST changes will boost volumes, and rev up future margins. So, the Indians, rather than being reactive, are buying for the long term, and with a mindset of 2-3 years, or more.
However, the foreigners are being, what can one say, foreigners. Given their constraints to show quarterly gains, and provide adequate annual returns to shareholders, they need to book profits whenever they spot opportunities, or whenever they even smell a whiff of a crisis. Hence, they sold in the past because of low corporate earnings. They are selling now because of the Iran war, rise on global oil prices, and economic disruptions. If they make money on their sales, they are comfortable because they have the flexibility o to enter at low values later. For them, the globe is the oyster. This is not true for Indians.
When indices slump, and then bump up, as has happened in the past 10 days, it indicates an ongoing churn in portfolios and holdings. Even when there is a deep fall, most sector-specific indices, and most stocks tumble, but there are some that survive, and are resilient to the shocks. Such trends indicate that investors are possibly shifting from some falling sectors to those that seem to withstand the pressures. Once the dust settles, when it does, and the air clears, the investment scenario may change. Some sectors will gain, and some lose permanently.
“Despite being sustained sellers in the market, FIIs (foreign institutional investors) have been selectively buying in some sectors like telecom. This partly explains the resilience in telecom stocks. There is a portfolio churn happening away from IT, and highly-valued FMCG stocks towards telecom, pharma, defense, and select financials. Market leaders and fancied stocks in these segments will continue to be resilient even in a choppy market,” explains an analyst. The only problem is that different brokerages have different perspectives on what they dub as survival stocks in the post-war period.
In effect, bargain buying becomes the norm for the Indian investors, who have limited choices since they have limited options to buy in foreign exchanges, and they do not wish to rejig the portfolios in terms of asset classes. If they need to buy Indian equities and, for instance, invest 70 per cent of the portfolio in stocks, they buy what seems cheap, and has some chances of going up in the future. When this happens, the downward trend changes, only if for a small period. The buying window closes as soon bad news streams in through the same window.
