Sensex gains 555 pts, Nifty above 24,600: Upbeat Q1 GDP data among key factors behind market rise

Sensex gains 390 points, Nifty above 24,500: Strong Q1 GDP among key factors pushing markets up

Benchmark indices Sensex and Nifty took a breather on September 1, closing in green after three consecutive sessions of recording losses. Sensex gained nearly 555 points (over 0.7 percent) to end the session at 80,364.49, while Nifty 50 rose nearly 200 points (over 0.8 percent) to close above the 24,600-mark.

The broader market indices also recorded strong gains, with the smallcap and midcap indices rising up to 2 percent. Most of the major sectoral indices, expect media and pharma, were trading in the green.

Here are the key factors behind the uptrend in Indian stock markets today:

Strong Q1 GDP numbers:

Indian economy grew 7.8 percent in the April-June quarter of the ongoing financial year. This is the highest growth recorded in five consecutive quarters, beating economists' estimates. Gross domestic product (GDP) topped both the RBI's 6.5 percent projection and the 6.6 percent median recorded in a Moneycontrol poll. The GDP growth was also stronger than the 7.4 percent rate recorded in the preceding three months (Q4 FY25) and 6.5 percent recorded a year earlier (Q1 FY25).

"The key driver for this upbeat opening is India’s strong GDP data, which has boosted investor confidence and supported sentiment across sectors. Backed by healthy economic momentum and stable global cues, the market is set to begin on a firm note, though moves may turn stock-specific as the day progresses," said Mandar Bhojane, Senior Technical & Derivative Analyst - Research at Choice Equity Broking Private Limited.

Optimism over PM Modi attending SCO Summit in China:

Prime Minister Narendra Modi attended the Shanghai Cooperation Organization (SCO) summit in Tianjin, China. At the summit, he has met Chinese President Xi Jinping and Russian President Vladimir Putin.

This holds strong significance in global geopolitics after US President Donald Trump's administration increased  tariffs on Indian imports to a whopping 50 percent. Additionally, the cooling tensions between India and China also may have boosted the markets.

"Global geopolitics is transforming fast in response to Trump’s tantrums. The coming together of China, India and Russia can have profound consequences on global power equations and thereby on global trade. This will have its impact on the stock market too," said VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited.

Strong auto sales:

Several automakers like Maruti Suzuki, Bajaj Auto, Hyundai and others released strong sales data for the month of August, beating expectations. This boosted the stocks, and the overall index as well.

The sharp rise in the share prices pushed the Nifty Auto index up nearly 3 percent to close at 25,660.

US court rules Trump tariffs illegal:

A US appeals court last week ruled that most of Donald Trump's tariffs are illegal. The court has allowed the tariffs to remain effective till October 14, giving the Trump administration time to file an appeal with the US Supreme Court.

Trump has criticized the move, saying, "If these Tariffs ever went away, it would be a total disaster for the Country." The court ruling may have also provided some relief to the Indian stock markets, which earlier fell sharply after the additional tariffs took effect.

VK Vijayakumar noted that the US court ruling on Trump's tariffs is a big development, and investors will await the final verdict by the US Supreme Court on the issue.

Value buying:

After three days of fall, investors may have resorted to value buying now. Sensex dropped more than 1,800 points (over 2 percent) to fall below the 80,000 mark, while Nifty 50 fell 541 points (over 2 percent) to fall below the 24,500-mark between August 26 and August 29.

"The Nifty 50 is trading below its 100-DEMA, showing a weak trend with risks of further downside if 24,350 breaks. Key supports are at 24,350 and 24,150, while resistance lies at 24,600–24,800. Traders are advised to stay cautious, avoid aggressive positions, and consider buying near 24,350 with a stop-loss at 24,280 and profit booking around 24,700–24,800," said Mandar Bhojane, while explaining the technical side of the benchmark index.

India Vix, which measures volatility in the markets, also dropped nearly 4 percent to 11.29 on September 1.

IT stocks lead gains:

IT stocks rose 1.3 percent after data showed the US Personal Consumption Expenditures (PCE) rose in line with estimates, keeping alive the expectations of a rate cut in September. The Federal Reserve tracks the PCE price measures for its 2 percent inflation target.

Lower interest rates in the US make emerging markets such as India more attractive for foreign investors.

All 10 constituents of the Nifty IT index traded in positive territory, with Mphasis leading the pack. The surge followed Morgan Stanley’s overweight rating on the stock, along with a revised target price of Rs 3,625 per share, up from Rs 3,500 earlier.

GST reforms expectations:

The GST Council, chaired by Finance Minister Nirmala Sitharaman, is slated to meet in New Delhi on September 3-4 to deliberate on the Centre's proposal for a simplified two-rate structure of 5 percent and 18 percent. According to market experts, this will likely act as a strong boost for several sectors.

"The proposed GST reforms can accelerate growth in the coming quarters. This, along with the huge liquidity coming into mutual funds will continue to support the market," VK Vijayakumar said.

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