Sensex rockets 3,000 points in a week, investors add Rs 22 lakh crore. Is it time to sell?

Led by a confluence of cooling bond yields, a topping-out of the dollar index, and a rupee rally that saw its best weekly gain in 2 years, Sensex has rallied over 3,000 points in just 5 trading sessions with investor wealth ballooning by Rs 22 lakh crore as the market capitalization of BSE-listed stocks shot up to Rs 413 lakh crore.

With a 4% surge, it was the best weekly gain for Sensex and Nifty in the last 4 years. Short covering helped the Sensex breach the 77,000 mark in intraday trades. Additionally, squaring off positions ahead of next week’s monthly F&O expiry also contributed to the sharp rally, analysts said.

The rally was broad-based, with smallcap and midcap indices ending the week 8-9% higher.

Foreign institutional investors (FIIs), once aggressive sellers, are now rushing back, turning net buyers in three of five sessions this week, including 2025’s highest buying of nearly Rs 7,500 crore on Friday. The shift comes as the US Federal Reserve signaled a dovish stance, hinting at two potential rate cuts this year, injecting fresh optimism into Dalal Street.

The sheer velocity of the surge has left investors exhilarated and wondering—should they cash in on the gains or stay put for more?

Vinod Nair, Head of Research at Geojit Financial Services, highlighted that despite global uncertainties like escalating trade tensions, improving domestic macroeconomic indicators, valuation corrections, and robust earnings expectations have investors scrambling for bargains.Also read | Nifty’s marvellous March theory coming true. But is it too soon for you to celebrate?

Should You Sell the Rise?

Despite the dramatic uptrend, market experts are cautioning against booking profits too soon. Dharmesh Shah, Head of Technical Research at ICICI Direct, insists that this is a ‘buy on dips’ market, not a ‘sell on rally’ one. “Any dip towards 22,500-22,700 should be seen as a buying opportunity. We see the market heading towards 23,700, with 23,400 acting as immediate resistance,” he said.

Shah also pointed to a significant improvement in market breadth. “At the time when Nifty was at 22,000, only 7% of stocks were trading above their 50-day moving average. That figure has now surged to 41%.” RSI moving above 60 for the first time since December indicates a revival in momentum, he said while warning that volatility could spike around key global events, particularly US tariff decisions.

Vikas Khemani, Founder of Carnelian Asset Management, believes the rally is far from over and won’t rule out double-digit returns by the end of the calendar year. Stating that there’s nothing structurally wrong with the market, he said valuations have corrected, earnings growth is on track, and as soon as interest rate cuts materialize in the U.S., we could see a decisive rally.

“In this process of uncertainty and excessive valuation, valuations have corrected, and earnings have moved ahead by a quarter or two. The real trigger for a strong rally will be the interest rate cuts in the U.S. Whether it happens in 3 months, 6 months, or 12 months, it is inevitable,” Khemani added. “If tariffs are handled in a balanced way, we could see the rally happening sooner rather than later.”

Naveen Kulkarni, CIO of Axis Securities PMS, sees market corrections as a blessing in disguise saying that bear markets have historically lasted 6 to 9 months in India and we have already seen severe corrections and 5 months have already passed.

“History has suggested that investing during bear markets has resulted in solid returns for long-term investors. We believe that FY26 is likely to be an excellent year for the equity markets, but returns could be slightly back-ended. Nonetheless, we expect solid double-digit returns in FY26, which are more likely to exceed the modest expectations of investors,” he said.

Shah also pointed out potential risks, stating, “April 2 will be an important date to watch out for, as U.S. tariff decisions could impact the Indian markets, leading to some volatility. However, overall sentiment remains positive.”

Also read | Nifty roars back after almost every major crash within a year. Will this time be different?

The Verdict: Hold, Don’t Fold

While the market has posted an eye-popping rally, analysts suggest that investors should resist the urge to lock in profits too soon. Instead, they recommend staying invested and using dips as buying opportunities. With FIIs making a comeback, domestic macros improving, and global rate cuts on the horizon, the foundation for further gains is strong. That said, short-term volatility cannot be ruled out, and traders should keep an eye on key triggers, including US tariffs and the upcoming Q4 results season.