GDP surge & FPI renewal: Indian markets brace for historic highs

The beginning of December augers wells for bulls of Indian markets as domestic markets are expected to hit fresh all-time highs on the back of strong GDP numbers and revived FPI inflows. Gift Nifty at 20,350 indicates a gap-up opening of about 80 points as Nifty futures closed at 20,270.60. Nifty had hit an all-time high of 20,222 in September, and since then, the market has been in correction mode. On Thursday, Nifty closed at 20,133. Sensex is ruling at 66,988 while it registered its all-time high at 67927.

Mohit Ralhan – CEO of TIW Capital on GDP estimate For FY Q2 ‘23, said: “At 7.6% YoY, growth momentum continued in Q2 FY 2024. Robust growth in investments and government expenditure led to the higher-than-expected GDP print. Private consumption growth was modest on a high base. “Due to a comparatively dry monsoon, manufacturing and mining activities were robust. Both registered double-digit growth on an annual basis. The agriculture sector was subdued as erratic monsoon weighed on kharif crop output. Meanwhile, services growth also remained strong on an unfavourable base, he added.

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Analysts expect the Santa Claus rally to help the market sustain the momentum. Following the GDP number and due to the recent MSCI rejig, analysts expect foreign investors to pump money into Indian stock.

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Raghvendra Nath, Managing Director, Ladderup Wealth Management Pvt. Ltd, said: “GDP came out at 7.6%, much higher than the general consensus. The continued robust growth of the Indian economy was owed to the growth in the manufacturing and mining sector. India continues to remain the fastest growing major economy in the world. With the robust growth reported in India along with China still in a troubled situation, we can expect healthy inflows in Indian equity markets, with NIFTY being pushed to new highs.”

However, global stocks are mixed. While the Dow Jones closed on a strong note, the Nasdaq ended weak while the S&P closed edged up. However, most Asian stocks are down in early deals on Friday.

Marketmen also read the exit polls positively.

According to Emkay Global Financial, the exit polls of five states favour BJP for the key Hindi belts of Rajasthan and MP, while Chhattisgarh and Telangana are seen as a tight race to the top for the Congress. While this news adds more fuel to the market, the exit polls are not definitive, nor are state results a perfect proxy for national results. Nonetheless, a decisive BJP win will reinforce the consensus that the party is on the front foot for the 2024 general elections. This will likely add another leg of the rally to the markets, as policy continuity will be viewed as a positive growth-shock in the medium term.

“Markets on Friday will react to Exit poll outcome and India’s GDP data. Overall we expect positive trend to continue in the market. Auto stocks will be in focus as OEMs will announce their monthly sales data on Friday,” said Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services Ltd

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