Upbeat GDP, auto sales data lifts mkts; Nifty logs biggest gain in 2 weeks

The rally was fuelled by better-than-expected GDP growth of 7.8% for the April-June quarter. Information technology stocks led the gains, benefiting from the rupee's new lows against the US dollar

Markets kicked off the new month on a positive note, with the Nifty rising close to 1 per cent.

 

The rally was fuelled by better-than-expected GDP growth of 7.8 per cent for the April-June quarter. Information technology stocks led the gains, benefiting from the rupee’s new lows against the US dollar.

 

Sentiment was further lifted by a US appeals court decision declaring most of US President Donald Trump’s tariffs illegal, though the tariffs remain in place until October 14, pending a possible Supreme Court appeal.

 

Snapping its three-day losing streak, the Nifty 50 index rose 198 points, or 0.81 per cent — most in two weeks — to end at 24,625. Meanwhile, the Sensex added 555 points, or 0.7 per cent, to end at 80,364. All major indices with the exception of media and pharma ended with gains. Nifty Auto and Nifty Consumer Durables outperformed with over 2 per cent gain. The gains were underpinned by higher monthly auto sales and optimism the boost to consumption  from lowering of goods and services tax (GST). The GST council is expected to meet later this week to discuss tax cuts.

 

The Nifty IT and Nifty Metal rose over 1.6 per cent buoyed by a rally in global equities. 

 

Expectations of a US Federal Reserve rate cut in September also improved investor appetite, as lower rates in the US tend to make emerging markets like India more attractive for foreign investment.

 

“The economy expanded at its fastest pace in five quarters, well above both RBI and Street projections. This reinforces confidence in India’s growth resilience despite global uncertainties. At the same time, easing tensions between India and China, provides a geopolitical tailwind, especially after the shock of Trump’s tariff hikes. Further relief came from a US appeals court ruling most of Trump’s tariffs illegal, which, while temporarily still in effect, raised hopes of reversal,” said Gaurav Garg, analyst at Lemonn Markets Desk.

 

However, some economists urge caution in interpreting the GDP data.

 

“Strong Q2 GDP is amplified by low deflators, one-off factors and is backward looking. The tariff impact will be visible after September,” said Nomura in a note. “In our view, this is not a signal of strong underlying demand, as it was boosted by low deflators, export frontloading, and its composition appears at odds with other high frequency data and demand signals,” it added.

 

The broader markets Nifty Midcap 100 and Nifty Smallcap 100 indices rose 1.97 per cent and 1.57 per cent, respectively. India Vix fell 4 per cent to 11.3. The market breadth was strong with 2,795 stocks advancing and 1,391 declining. The market capitalisation of all BSE-listed firms rose by ₹5.2 trillion to ₹449 trillion.