Strong fundamentals behind stock market rally, focus on long term investment: Experts

Experts said corporate balance sheets are very clean now compared to 5 years ago. Most of the corporates have deleveraged their and have scope for capacity expansion.

"The recent rally in the Indian market is supported by strong domestic macroeconomic fundamentals, like , and (Purchasing Managers' Index). Even is also largely stable," Narendra Solanki, Head Fundamental Research-Investment Services, , said.

Wealth management company , Founder & Director, Vinnaayak Mehta said, "diversifying portfolios, investing in quality stocks with strong fundamentals, and avoiding speculative trading can help mitigate risks".

"It is crucial to avoid making short-term investments... Instead, focus on horizons of at least two to three years," Mehta said.

The volatility is expected to persist until the final phase of the election on June 1. However, despite these fluctuations, a major correction in the market before the election results is unlikely as the markets have already factored in potential outcomes, he said.

Tejas Khoday, co-founder and CEO of trading platform said with the quarterly earnings season in progress and many companies announcing above-average results, the valuations don't seem to be too expensive.

While few sectors like automotive, realty, goods, infrastructure, and consumer discretionary have raced ahead of their fundamentals, banking and financials, FMCG, IT, and chemicals are at reasonable valuations. Investing should align with individual financial goals, capital availability and risk tolerance.

"Retail investors should adopt a long-term perspective, avoid timing the market, and consider Systematic Plans (SIPs) and diversified portfolios to mitigate risks and capitalise on opportunities," Khoday said.

The 30-share BSE Sensex has risen 4 per cent so far this year. The index closed at 75,170 points on Tuesday.

The gains in Indian equities have come despite Foreign Portfolio Investors (FPIs) withdrawing capital from the . FPIs have pulled out over Rs 20,700 crore from equities so far this year.

, Chief Economist Upasna Bhardwaj, said, "In this entire cycle, I would say there is no such overheating of stock markets. There are some reasonable fundamental factors which could be supportive of the up move in the equity market."

Bhardwaj also said that given that there is minimal retail participation in equities, structurally there is a long way to go for retail participation to increase. "I think there is more scope for equity markets to go higher," she said.

Market experts believe that the composition of the Indian equity index, with higher weightage in sectors such as financials, IT, auto, and FMCG, generally commands higher valuations globally.

This suggests that Indian equities are currently close to fairly valued and that these valuation multiples are likely to be sustained over the medium to longer term, according to Pradeep Gupta, vice chairman, .