Is the recent optimism in equity markets sustainable? Analysts weigh in

The recent bounce in the markets has been led by a pause in the rate hiking cycle, but the 'higher for longer' narrative is yet to be fully factored in

After a sharp downturn that began in the second half of September following the Sensex and Nifty hitting their all-time highs of 67,927 and 20,222 respectively, Indian equities have staged a turnaround in the last three sessions fuelled by a dovish US Federal Reserve (Fed). 

The Sensex benchmark has recovered 2.5 per cent from 63,148, its lowest level in four months that it touched on October 26, as investors grew hopeful that the Fed’s rate cycle has come to an end.

However, analysts believe that the current optimism is not sustainable and is only a result of short-covering. The upcoming state elections