Sensex, Nifty jump above 1 per cent: What has led to this gain?

Benchmark stock indices Sensex and Nifty surged over 1 per cent in early trades on Friday (March 1), following the release of better-than-expected gross domestic product (GDP) growth numbers for the quarter that ended December 2023. The country’s economy grew 8.4 per cent in Q3 FY24, the data released by the National Statistical Office (NSO) on Thursday evening showed. ## How much have Sensex and Nifty gained on March 1? The BSE’s 30-share Sensex gained 800 points, or 1.1 per cent, to rise to 73,307 in morning trades. It opened at 72,606.31 on Friday, compared to the previous close of 72,500.3. The broader Nifty 50 was up 238 points, or 1.08 per cent, to surge to 22,220. 7. It opened at 22,048.3 as against Thursday’s close of 21,982.8. ## What led to the rise in markets? “The main factor influencing the market today is likely to be the better-than-expected Q3 GDP growth number which has come at an impressive 8.4 per cent. However, it is important to note that the GVA has come on expected lines at 6.5 per cent. The difference between GDP growth and GVA is due to the excellent 32 per cent growth in net indirect taxes,” said V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services. Significant internals from the GDP numbers are the 11.6 per cent growth in manufacturing, the 9.5 per cent growth in construction and 10.6 per cent growth in capital formation. The impressive GDP numbers provide fundamental support to the bull market. Large caps like Reliance Industries Ltd (RIL), Bharti Airtel, L&T and ICICI Bank have the potential to lead the rally. Tepid private consumption numbers will be a drag on consumer staples stocks like HUL, Vijayakumar said. • After tax havens, dirty money finds a new home: Cryptocurrency • Agencies track trail: India to China via Dubai and Cambodia • $2.6 bn in 2024, $15 bn by 2035: Growing unchecked, no guardrails ## How has the Indian economy performed in Q3? India’s GDP surged to a six-quarter high of 8.4 per cent in Q3 FY24, pushing the growth rate for 2023-24 to 7.6 per cent as against the earlier estimate of 7.3 per cent, the data released by the NSO showed. The Q3 GDP growth number was much higher than the market expectation of around 6.5 to 6.6 per cent. On the demand side, fixed investment led by public capex continues to be the key driver along with sequentially lower drag from net exports, while consumption continues to lag, a research report by Nomura said. On the supply side, the agriculture sector has underperformed, but the industrial and services sectors have remained resilient. The broad-based strength in services growth, particularly in the labour-intensive ‘trade, hotels, transport & communications’ segment, stands in contrast to the narrative of weak consumption growth on the demand side. ## What is the outlook on India’s economic growth? According to Nomura, growth is likely to remain resilient, especially under the environment of a stable global economic outlook. However, there are headwinds, including the impact of the general election code of conduct on public capex support, patchy recovery in private capex, weak state of consumption, and ebbing terms of trade advantage for corporates as input costs rise. “We project GDP growth at 6.1 per cent in 2024 (vs 7.7 per cent in 2023) and 6.2 per cent in FY25 (vs 7.6 per cent in FY24), below the RBI’s expectation of 7 per cent,” Nomura said.