Better-than-expected GDP growth in the April–June quarter of the current fiscal drove benchmark indices higher on Monday, snapping a three-day losing streak. Sentiment also turned bullish as the country’s manufacturing sector gained strong momentum, with the HSBC India Manufacturing Purchasing Managers’ Index rising to 59.3 in August — the highest level in over 17 years.
Starting the week on a positive note, the Sensex surged 554.84 points, or 0.70%, to close at 80,364.49, while the Nifty gained 198.20 points, or 0.81%, ending the day at 24,625.05. Both indices had lost over 2% each in the previous three sessions due to the impact of the additional 25% US import tariff.
The Indian economy expanded 7.8% in Q1FY26, the highest in a year and above the 6.7% median forecast in a Bloomberg survey of economists.
Analysts see cautious optimism
“Markets began the week on a positive note, supported by upbeat Q1 GDP data. After an initial uptick, the Nifty traded in a range during the first half; however, renewed buying in select heavyweights pushed the index higher as the session progressed. Eventually, it gained around 0.8%, retesting the hurdle of its medium-term moving average near the 24,625 level,” said Ajit Mishra, SVP – Research, Religare Broking.
The setup now favors consolidation after the recent decline, though underlying concerns remain. Despite robust real GDP growth, persistent foreign fund outflows and export-related challenges amid tariff headwinds could keep participants cautious, Mishra added.
“The bulls staged a strong rebound as Nifty snapped its three-day losing streak and closed above 24,600. The index now faces a key resistance zone around 24,700, where both the 21-DMA and 100-DMA coincide. A breakout above this level could trigger an upside move towards 24,900,” said Nilesh Jain, Head – Technical and Derivatives Research, Centrum Broking.
However, the index is not fully out of the woods yet, and as long as it trades below 25,000, pullbacks may attract selling pressure, Jain cautioned.
Broader markets and sectors rally
Broader indices outperformed in the rally, with the BSE Midcap jumping 1.64% (its highest in three months) and the BSE Smallcap rising 1.49% (its highest in two months).
Market breadth turned positive after five sessions, with 2,795 gainers against 1,391 losers on the BSE. Investors’ wealth soared by ₹5.20 lakh crore to ₹448.85 lakh crore.
Auto, consumer durables, consumer discretionary, capital goods and power were the top sectoral gainers, rising up to 2.68%.
M&M, Tata Motors, Trent, Eternal and Asian Paints were the top Sensex performers, advancing up to 3.65%, while Sun Pharma, ITC, HUL, Titan Company and Reliance Industries were the top laggards, slipping up to 1.87%.
Foreign portfolio investors net sold shares worth Rs 1,429.71 crore while the domestic institutional investors bought shares worth Rs 4,344.93 crore, as per provisional data by the BSE.
Banking indices also joined the rally, with the BSE Bankex and Bank Nifty gaining up to 0.68%, snapping a five-day losing streak.