Stock market indices started the week on a positive note driven by strong Q2 GDP figures, boosting investor sentiment on Dalal Street. The S&P BSE Sensex and NSE Nifty50 reached new record highs early in the trading day. The Sensex surged by 309.06 points to 86,015.73, while the Nifty50 climbed 84.50 points to 26,287.45.
The broader market indices also saw gains, supported by a significant decrease in volatility, which was perceived as a favorable sign for investors seeking stability in the short term.
Leading the Nifty50 gainers were JSW Steel, Adani Ports, SBI, TMPV, and ONGC, while ITC, IndiGo, Tata Consumer Products, Bajaj Finance, Nestle India, and Titan were among the top losers.
Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, highlighted an interesting aspect of the current market rally. Despite new index records, there is a lack of celebration among investors as many retail portfolios have not yet recovered to their pre-September 2024 levels.
Vijayakumar pointed out that the rally’s narrow focus on a few heavyweight stocks like HDFC Bank, RIL, ICICI Bank, Bharti Airtel, L&T, ITC, Infy, and SBI, which hold significant weight in the Nifty, has led to this disparity. While these heavyweights drive the index up, a large number of stocks in the NSE 500 remain below their peak levels from September 2024, impacting retail investors’ portfolios.
Looking at the macroeconomic perspective, Vijayakumar acknowledged the potential of the 8.2% GDP growth in Q2, supported by growth in manufacturing, services, and consumption, to further lift the market. However, he expressed concerns over the modest nominal growth of 8.7% due to a low GDP deflator, which might disappoint the market. He suggested that a rate cut from the Monetary Policy Committee (MPC) on Friday might not be necessary given the strong economic performance.
Anand James, the chief market strategist at Geojit Financial Services, remains optimistic about the Nifty’s upward momentum, noting that despite recent fluctuations, the chart setup indicates potential for further gains. He predicted temporary dips early in the week but expects them to be short-lived.
James projected a continued rise targeting 26,460-26,550 initially, followed by 26,900-27,200. However, he cautioned that a drop below 26,090 could lead to levels of 25,860-25,700 or even 25,300.