Indian stock markets kicked off the week on a high as investors cheered strong economic numbers and renewed momentum in manufacturing. India’s gross domestic product expanded 7.8 percent in the April to June quarter of the current fiscal year, the fastest growth in the past year and a clear signal that the economy is showing resilience despite global headwinds. The figure came in above the median forecast of 6.7 percent by economists surveyed by Bloomberg, boosting optimism across Dalal Street.

Alongside GDP, fresh data from the HSBC India Manufacturing Purchasing Managers’ Index further lifted confidence. The PMI jumped to 59.3 in August, its highest reading in more than 17 years, underscoring the strength of domestic demand and industrial activity. For investors who had been rattled by a string of declines in the previous week following the impact of additional US import tariffs, the economic data offered a much-needed relief rally.

The Sensex surged 554 points to close at 80,364 while the Nifty added nearly 200 points to settle at 24,625. This rebound snapped a three-day losing streak that had wiped out more than 2 percent from each of the benchmark indices. Market sentiment turned positive early in the session and gradually strengthened as heavyweights in autos, capital goods, and consumer sectors led the rally.

Broader markets saw even sharper gains. The BSE Midcap index jumped 1.64 percent to log its best performance in three months, while the BSE Smallcap climbed 1.49 percent, its best in two months. Investors’ wealth rose by more than five lakh crore rupees in a single day, taking the total market capitalization of BSE-listed companies to nearly 449 lakh crore rupees. Market breadth also turned decisively positive, with more than 2,700 stocks advancing against just over 1,300 that closed lower.

Analysts said that the upbeat GDP print and the surge in manufacturing pointed to improving economic fundamentals. Ajit Mishra of Religare Broking noted that the Nifty traded range-bound in the first half but picked up strength in the latter part of the session as buyers returned to large caps. He added that while the short-term momentum is positive, caution may persist given ongoing concerns about foreign fund outflows and export challenges related to tariff disputes.

Nilesh Jain of Centrum Broking highlighted that the Nifty now faces a crucial resistance zone near 24,700, where its key moving averages converge. A break above this level could pave the way for further upside toward 24,900, although any failure to sustain above 25,000 may bring renewed selling pressure. In other words, while Monday’s rally was strong, the market is not completely out of the woods yet.

Sectoral action was broad-based, with auto, consumer durables, discretionary, capital goods and power leading the way. Mahindra and Mahindra, Tata Motors, Trent, Eternal and Asian Paints were among the top gainers, rising as much as 3.6 percent. On the other hand, Sun Pharma, ITC, HUL, Titan and Reliance Industries saw profit-taking and ended the session lower. Banking stocks also participated in the rebound as both the BSE Bankex and the Bank Nifty gained close to 0.7 percent, snapping a five-day losing streak.

Foreign portfolio investors remained cautious, selling shares worth around 1,430 crore rupees. However, this was more than offset by domestic institutional investors, who bought equities worth over 4,340 crore rupees, providing additional support to the rally.

The strong start to September has given traders and investors some relief after a turbulent August marked by global uncertainties and foreign outflows. With the Indian economy demonstrating robust growth and manufacturing hitting record highs, the near-term outlook has turned brighter, although market participants remain alert to potential risks from global trade tensions and currency fluctuations.

For now, the markets are riding high on optimism, with domestic investors showing confidence in the resilience of the Indian economy. If the momentum in GDP and manufacturing sustains, India’s equity markets could continue to attract inflows and potentially extend the current rally.

 

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