Sensex Surges Over 1,000 Points in Two Days Despite GDP Shocker
Indian equity markets have defied expectations by posting a robust rally over the past two sessions, shrugging off concerns surrounding the Q2 FY25 GDP slowdown. The BSE Sensex surged over 1,050 points (1.3%) in two days, closing Tuesday at an intraday high of 80,853, while the NSE Nifty 50 climbed 0.7% to reach 24,446. This strong performance comes despite last Friday’s report of a seven-quarter-low GDP growth rate of 5.4%.
What’s Driving the Market Rally?
Market experts believe the weak GDP growth data had already been factored into stock prices. October and November corrections, coupled with underwhelming Q1 corporate earnings, had prepared investors for the disappointing numbers. Instead, the focus has shifted to upcoming economic cues, especially the Reserve Bank of India’s (RBI) monetary policy announcement later this week.
Sectoral Rotation Fuels Optimism
On Monday, defensive sectors like pharma and consumer durables drove gains, while Tuesday witnessed a shift to cyclical sectors, with banking, financial services, metals, and oil & gas stocks taking the lead.
The Nifty Bank index rose by 1%, bolstered by optimism about interest rate-sensitive sectors.
Banking and financial services are expected to sustain their momentum, with experts like Gautam Shah projecting a target of 55,000 for the Nifty Bank index.
Kunal Rambhia, Founder of The Streets, attributed the rally to reduced Foreign Institutional Investor (FII) selling and expectations of policy clarity from the RBI.
Key Levels to Watch on Nifty 50
Technical analysts are closely monitoring the 24,500 level on Nifty 50, a critical resistance point. A decisive move above this level would signal the continuation of the uptrend and boost market sentiment.
GDP Data: Silver Linings Amid Challenges
Despite the weak overall GDP growth, private consumption grew at 6%, reflecting resilience in consumer demand. This was highlighted by Vikas Gupta, CEO of OmniScience Capital, who described it as a key positive in an otherwise tepid economic scenario.
What’s Next for Investors?
The RBI’s monetary policy announcement later this week will be pivotal. Investors are keenly awaiting guidance on interest rates, which could set the tone for market movements in the coming weeks. A dovish stance could bolster confidence further, while a breach of the 24,500 level on Nifty would solidify the bullish momentum.
Banking and financial services, along with sectors like metals and oil & gas, remain the focal points for investors. Reduced FII outflows and sectoral leadership suggest that the markets may have bottomed out for the near term.
Conclusion
The Indian stock market’s resilience despite GDP concerns highlights its underlying strength. Investors should watch key levels on Nifty and remain attuned to policy cues from the RBI. The stage seems set for continued gains, provided macroeconomic factors align favorably.
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