IHSG Rebounds and Risk-On Sentiment Boosts Market Optimism: Which Stocks Should Investors Watch?
JAKARTA, KOMPAS.com - The Composite Stock Price Index (IHSG) has begun to rebound. On Wednesday’s trading (1/4/2026), the index rose 1.93% to the level of 7,184.43.
The strengthening of the IHSG occurred alongside rising expectations among market participants regarding the potential de-escalation of the conflict in the Middle East, as well as momentum from rallies in Asian exchanges and Wall Street.
Capital market analyst and Founder of Republik Investor, Hendra Wardana, assesses that the current rise in the IHSG more reflects a short-term response to improving global sentiment, rather than permanent fundamental changes.
“However, it must be understood that such sentiment is inherently short-term and based on expectations, not certainty,” Hendra told Kompas.com on Wednesday evening.
In this situation, the occurring risk-on pattern will only last in the short term, as global market participants will generally quickly engage in profit-taking actions when there are no further developments.
“In global market experience, geopolitical sentiment usually only supports the market for a few days to several weeks, as participants will quickly take profits when there are no more certain further developments,” he explained.
Nevertheless, the opportunity for continued strengthening remains open if the positive scenario truly materialises.
If conflict de-escalation is realised and geopolitical tensions subside, the IHSG has the potential to strengthen in the 7,300-7,500 area in the medium term.
According to him, this condition could occur because a decline in energy prices, particularly oil, has the potential to ease global inflation pressures.
This, in turn, opens up room for central banks worldwide to loosen monetary policy, while increasing foreign fund flows to emerging markets like Indonesia.
In that scenario, sectors sensitive to interest rates are expected to be the main drivers of index strengthening.
Banking, consumer, property, and industrial stocks are deemed to benefit from lower funding costs and increased economic activity.
Conversely, the risk of correction still looms if de-escalation hopes are not realised or the conflict heats up again.
In such conditions, the IHSG has the potential to come under pressure again and even fall below the 7,000 level.