Nifty gains nearly 1% on positive economic cues

The Nifty ended the day at 19435.3, up 0.94%. The Sensex also closed with gains of 0.86%.

“Markets bounced back sharply on the back of a relief rally aided by upbeat Q1 GDP numbers that cheered investor sentiments,” said Amol Athawale, vice president, technical research, Kotak Securities Ltd.

This shows that despite hiccups in global macros coupled with FII (foreign institutional investor) outflows from the domestic market last month, India continues to buck the trend on economic growth parameters, said Athawale.

Most sectors contributed to the up move in the markets. While strong gains were seen by banks and financial-services stocks, metals and energy were the key gainers, adding to the momentum for the indices. NTPC Ltd, Jio Financial Services Ltd, ONGC Ltd, JSW Steel Ltd and Tata Steel Ltd stood among the top five Nifty gainers as they rose 3-5% driving up the indices.

Ratings agency Fitch keeping ratings intact for certain state-run banks and a stable outlook for ONGC supported the gains. The Nifty Auto index, with gains of 1.65%, also stood among the prominent gainers.

The robust economic outlook propelled key manufacturing sectors to lead the rally, while strong sales figures generated increased interest in auto stocks, said Vinod Nair, the head of research at Geojit Financial Services. The positive opening in the global markets provided additional momentum for investor sentiment, particularly as US PCE inflation aligned with expectations, he added.

As per Nair, the significant gains for the market were buoyed by favourable global cues, a higher-than-expected domestic manufacturing PMI, and positive GDP growth data.

The rally also added to the confidence of market participants despite some concerns that have erupted due to rising crude prices and weak monsoon activity, analysts said. Moody’s Investors service raising India’s growth projection for 2023 amidst slowing global growth is positive for sentiments and is likely to support global fund flows.

Foreign portfolio investors were net buyers worth ₹487.94 crore in the domestic markets on Friday. Domestic institutions supported well and were net buyers to the tune of ₹2,294.93 crore in the markets. The market breadth also ended strong on the advancing side, helped by continued buying in midcap and smallcap space, which is another comforting factor.

India’s Goods and Services Tax (GST) revenues for August also showed a growth of 11% year-on-year, which also supports confidence in the Indian economy, said analysts.

Technicals indicate that markets may trade in the positive territory. On the daily charts we can observe that the Nifty has witnessed a sharp pullback from the 19,250 zone where the Nifty has been witnessing buying interest, said Jatin Gedia, technical research analyst at Sharekhan by BNP Paribas. The daily and the hourly momentum indicator has triggered a positive crossover with a divergence which is a bullish sign from a short-term perspective, added Gedia.

“We expect the market to trade in a range with sector- and stock-specific actions as the broader market momentum remains positive,” said Siddhartha Khemka, head of retail research, Motilal Oswal Financial Services Ltd.

The rupee also closed 7-8 paise stronger at 82.71 to a dollar. The strength in the Chinese currency and FPI inflows are likely to have weighed on the US Dollar, said Anindya Banerjee, vice-president, currency derivatives and interest rate derivatives at Kotak Securities Ltd.

Updated: 01 Sep 2023, 11:21 PM IST